Jewish World Review Dec. 8, 1999 /29 Kislev, 5760
How do we minimize house-sale gain?
DEAR BRUCE: My husband and I bought a house in California in 1987 and lived there until 1994. We then bought a larger home, which we now live in, and we rent out our first home. We would like to sell both properties and buy a new house using the equity from both. The difference between the present market value and original purchase price is about $100,000. We can substantiate about $20,000 in improvements. Is there any way to minimize the gain? -- J.S. Camarillo, Calif.
DEAR J.S.: You failed to give me a breakdown of where these monies were earned. The monies on your rental property will be taxed at no more than 20 percent, depending upon your income. Any profits from the sale of your home that you are currently living in and have for the last two years will be tax-free up to $500,000 per couple. You gave up this right on your first home when you converted it to a rental unit.
DEAR BRUCE: My husband and his sister disagree about how their little trucking company should be run, so he's agreed to sell out. The assets, less liabilities, equal between $100,000 and $150,000. They take very small salaries, plus health insurance. -- N.V. Warsaw, Wisconsin
DEAR N.V.: Aside from the hard assets, it doesn't seem to me that the company is worth very much. If they are only taking small salaries, what they have done, in effect, is bought a job. Your husband might be better served by taking half of the asset value (putting that at $75,000) and occupying himself with more favorable pursuits.
DEAR BRUCE: We are from a family of seven. We co-own a large and quite valuable piece of commercial property. The value seems to go up monthly, making us near millionaires. We can't seem to make a decision on how it should be sold or when. Everyone wants the money, but no one wants to make the decision. I propose that we have a public auction that is widely advertised with our attorney participating. What can you tell me about the merits of this type of approach? -- J.M. Knoxville, Tenn.
DEAR J.M.: Properly conducted by a well-known, reputable auctioneer, this may be a very good way for you to dispose of the property. You may want to break the property up into parcels or just leave it and sell it as a whole. There should be a "knock down" price, which means a minimum price that you will accept. A good auctioneer can frequently get more for your property than you would through listing agreements. This is another danger of leaving undivided property to several people -- it only takes one to upset the apple
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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