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17-07-2016, 10:04
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#1
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Registered User
Join Date: Jun 2015
Location: Vermont
Boat: TBD
Posts: 140
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OK, strange question perhaps - Taxes
Over the years I've heard people talk about selling their homes and buying a sailboat. My question is about capital gains (boring as hell right?)
If you sell your home and buy a boat wouldn't you need to pay capital gains tax on the home?
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17-07-2016, 10:11
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#2
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Registered User
Join Date: Jan 2010
Location: Port Ludlow Wa
Boat: Makela,Ingrid38,Idora
Posts: 2,050
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Re: OK, strange question perhaps - Taxes
Some portion of the gain may be offset depending on the circumstances. Boats are an expense not an investment unless you are a broker flipping 5 gallon overhauls.
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17-07-2016, 10:22
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#3
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Registered User
Join Date: Oct 2007
Location: Lakewood Ranch, FLORIDA
Boat: Alden 50, Sarasota, Florida
Posts: 3,464
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Re: OK, strange question perhaps - Taxes
I'm not sure I'd call it a 'strange question' as a misplaced one. The tax implications depend on a number of issues you don't mention but asking here is the wrong venue to depend on the answers. Suffice it to say no one here can give you the correct answer for your situation. Based on incomplete info.
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17-07-2016, 10:25
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#4
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Registered User
Join Date: Aug 2006
Location: Skagit City, WA
Posts: 25,453
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Re: OK, strange question perhaps - Taxes
It used to be your boat (if living aboard) could be a home. And at one time could be considered a second home. Not sure if that's still the case. Ask who does your taxes.
__________________
"I spent most of my money on Booze, Broads and Boats. The rest I wasted" - Elmore Leonard
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17-07-2016, 11:03
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#5
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CF Adviser Moderator Emeritus
Join Date: Sep 2007
Location: Virginia
Boat: Island Packet 380, now sold
Posts: 8,942
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Re: OK, strange question perhaps - Taxes
You live in the US, right?
If so, the IRS says you only pay tax on any capital gains in excess of $250,000 if filing separately or $500,000 if filing jointly.
__________________
Hud
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17-07-2016, 11:30
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#6
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Moderator Emeritus
Join Date: Feb 2011
Location: SF Bay Area
Boat: Islander 34
Posts: 5,486
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Re: OK, strange question perhaps - Taxes
Capital gains on a home is excluded to $250K if single or $500K if married and joint tax filers. You can't roll over capital gains any more thanks to new tax laws. You only have the $250K or $500K exclusion.
The good news is boats if lived aboard full time are coincided a home or a second home by the IRS. So interest is deductible on the boat if it's used as a vacation home or primary residence. You can also claim a homestead exemption for county property taxes (in most states). I have a homestead exemption for the Rose.
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17-07-2016, 11:40
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#7
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Registered User
Join Date: Apr 2016
Location: Lake Belton, TX, USA, Earth: 3rd rock from the Sun
Boat: Vagabond 14
Posts: 421
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Re: OK, strange question perhaps - Taxes
Well... the cap gains exclusion when selling a house is once every so many years ...
Talk to a CPA. You want the right info and tax law can confuse lawyers.
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17-07-2016, 12:16
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#8
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Registered User
Join Date: Jun 2015
Location: Vermont
Boat: TBD
Posts: 140
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Re: OK, strange question perhaps - Taxes
Quote:
Originally Posted by sailorchic34
Capital gains on a home is excluded to $250K if single or $500K if married and joint tax filers. You can't roll over capital gains any more thanks to new tax laws. You only have the $250K or $500K exclusion.
The good news is boats if lived aboard full time are coincided a home or a second home by the IRS. So interest is deductible on the boat if it's used as a vacation home or primary residence. You can also claim a homestead exemption for county property taxes (in most states). I have a homestead exemption for the Rose.
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Thanks for the help, this gives me a good starting point. Not sure why one post says nobody here could answer this. I was just looking for a general answer, not a complete dissertation.
Thanks again.
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18-07-2016, 08:02
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#9
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Registered User
Join Date: Sep 2011
Location: Toronto
Boat: Grampian 26
Posts: 167
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Re: OK, strange question perhaps - Taxes
In Canada you may be exempt from capital gains tax if you are selling your primary residence. As with all things, free advice is only worth what you pay for it. Your accountant or tax lawyer is the person to talk to.
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18-07-2016, 09:13
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#10
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Registered User
Join Date: Oct 2015
Location: Gulfport, FL
Boat: 2006 Jeanneau SO 37
Posts: 106
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Re: OK, strange question perhaps - Taxes
Check out the IRS rules for capital gains on one's home:https://www.irs.gov/taxtopics/tc701.html
Barbara
Ph.D. In Accounting
PS Don't assume no one here knows the answer!
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18-07-2016, 09:35
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#11
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Registered User
Join Date: Feb 2011
Posts: 2,150
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Re: OK, strange question perhaps - Taxes
Quote:
Originally Posted by Hud3
You live in the US, right?
If so, the IRS says you only pay tax on any capital gains in excess of $250,000 if filing separately or $500,000 if filing jointly.
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Same with a boat if its your "home". But then again that is a completely academic question. A boat appreciates?
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18-07-2016, 09:39
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#12
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Registered User
Join Date: Feb 2011
Posts: 2,150
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Re: OK, strange question perhaps - Taxes
Quote:
Originally Posted by sailorchic34
Capital gains on a home is excluded to $250K if single or $500K if married and joint tax filers. You can't roll over capital gains any more thanks to new tax laws. You only have the $250K or $500K exclusion.
The good news is boats if lived aboard full time are coincided a home or a second home by the IRS. So interest is deductible on the boat if it's used as a vacation home or primary residence. You can also claim a homestead exemption for county property taxes (in most states). I have a homestead exemption for the Rose.
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But you must keep your home/boat for a stipulated time before its a capital gains. If you rent either out on more than an occasional basis, you MUST depreciate the asset and recoup the depreciation at time of sale. Oh joys.
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18-07-2016, 09:40
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#13
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Moderator Emeritus
Join Date: Oct 2013
Location: Jacksonville/ out cruising
Boat: Island Packet 38
Posts: 31,351
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Re: OK, strange question perhaps - Taxes
I just went through that and it depends on what your basis is in the home, etc.
Mine was a little more complex as I owned the corporation that owned the house and land, I was told that I "would be alright" by my CPA, only to have the biggest tax bill of my life, his definition of alright and mine vary I suppose
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18-07-2016, 09:44
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#14
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Registered User
Join Date: Nov 2007
Boat: TRT 1200
Posts: 7,265
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Re: OK, strange question perhaps - Taxes
Quote:
Originally Posted by Hud3
You live in the US, right?
If so, the IRS says you only pay tax on any capital gains in excess of $250,000 if filing separately or $500,000 if filing jointly.
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This is true if your home is your primary residence and you have lived in it for at least 2 years out of the past 5 years.
Sent from my iPhone using Cruisers Sailing Forum
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18-07-2016, 09:52
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#15
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Registered User
Join Date: Feb 2016
Posts: 11
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Re: OK, strange question perhaps - Taxes
We are in escrow. We just asked this question of our escrow officer. She said exactly what post #14 says...
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