I have owned a townhouse here in MD. since Sept 2002. I have rented it out since then but now would like to sell it, and, current market values should allow me to make a profit of about $100,000 (before Cap gains tax
). Deprec and the deduction
for interest on mortgage have made this property show a paper loss but in actuality, the rentals pretty much covered my total expenses. Balance on mortgage is about 126,000 and props nearby are selling for about 245,000. Tnhs is now vacant and re-painted, spruced up, etc.
I am 67, retired this year and will show an income for 2009 (including 5 months employment, Social Security and small state pension) of about $15-20,000.
I am engaged, and my fiance and I want to build a small retirement home on a lot he owns outright. New House will probably cost about $125,000.
Will I have to pay cap gains on the sale/rebuild and how much?