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Old 17-07-2016, 10:04   #1
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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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Old 17-07-2016, 10:11   #2
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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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Old 17-07-2016, 10:22   #3
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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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Old 17-07-2016, 10:25   #4
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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.
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Old 17-07-2016, 11:03   #5
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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.
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Old 17-07-2016, 11:30   #6
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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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Old 17-07-2016, 11:40   #7
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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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Old 17-07-2016, 12:16   #8
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Re: OK, strange question perhaps - Taxes

Quote:
Originally Posted by sailorchic34 View Post
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.
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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Old 18-07-2016, 08:02   #9
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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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Old 18-07-2016, 09:13   #10
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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
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PS Don't assume no one here knows the answer!
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Old 18-07-2016, 09:35   #11
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Re: OK, strange question perhaps - Taxes

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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.
Same with a boat if its your "home". But then again that is a completely academic question. A boat appreciates?
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Old 18-07-2016, 09:39   #12
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Re: OK, strange question perhaps - Taxes

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Originally Posted by sailorchic34 View Post
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.
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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Old 18-07-2016, 09:40   #13
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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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Old 18-07-2016, 09:44   #14
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Re: OK, strange question perhaps - Taxes

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Originally Posted by Hud3 View Post
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.

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.


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Old 18-07-2016, 09:52   #15
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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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