Have a Tax Question? Ask a Tax Expert
Hi my name is XXXXX XXXXX I will be helping you today with your tax question. You are correct that if is a long term capital gain, asset held for more than a year, you will qualify for a lower tax rate at 15%. So if you are able to I would suggest that option B is better only because you are being paid to wait, and by waiting not only are you earning the rental income but you are also reducing your taxes on your gain from as much as $7200 down to $3600. This does come with a degree of risk, but if it is not costing you anything besides real estate taxes to hold the property, I think it is in your best interest from a tax perspective to wait. Even if this "buyer/renter" doesnt come through, if you have two offers right now so quickly chances are you will be able to get offers again next year if needed. Additionally it is unlikely that the real estate market is going to go any lower, so I think that although it is a risk to hold it, it is a low risk.
If you want to free up the capital though to take on another project that is something to consider also, but if you do not have a instant need for the cash and can afford to wait, I think that the rewards for waiting outweigh the risks.
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Joe, thanks much. I agree with you as the house is in a desirable location and won't lose value in the next 6 months.
You are welcome, I think that is your best bet considering the limited risk even if this buyer doenst work out
Is there anything else I can do for you to ensure you are satisfied with your answer?
Your answer is good. I'm not in need of any immediate capital, and considering that my loan on this house is 2.6%, it's not hurting me. Thanks much for your insight...Rick