My wife and I purchased a forclosure with 30 acres for 109k…
We purchased this for the land and was going to build, instead we gutted and remodeled the home for about 30k, I’m talkin everything is new, Plumbing,Roof,Siding,Windows,counter tops,vanites,sprayed ceiling,new tile, new carport, pergo flooring in living area,new heat & air, crown molding throuout, all new paint…
This is our starter home and is about 1600 sq ft, built in the late 60’s. We decided to sell this as it appraised at 210k after repairs (House and land)
We are looking to sell and build a larger home on 5 acres we purchased last year, only thing is i recently heard if we hadn’t lived in this house 2 years we would have to pay the capitol gains tax, we are about 5 months away from 2 years and really do not wanna wait because I feel the area is depreciating, so with that said
Is there anything I can do to get around this?
If not, what is the % TAX RATE on capitol gains in South Carolina?
I don’t know your state law, but there is a form you can use federally. I think it is a 1031. I know it works when you are buying a new property. If you used the money and put it towards a new investment it could work. I have never heard about using it for new construction on land you already own. Sorry, I wish I were more helpfull. Good luck.
however, you may have some options. will your lender provide interim financing, and then you sell your existing home just prior to closing? If construction takes 5 months, that’ll be long enough to cover you.
As Mark already said, put your present home on the market with a contingency that buyer does not get possession until you have gone to settlement on your new property. Now, contract to build your new home. Take your MLS listing on your current home and your appraisal to your lender and apply for bridge financing to build your new home. A bridge loan will let you use the equity in your current home as collateral for the bridge loan, give you the funds to build your new home now, and your first six monthly payments will be interest only on the new loan.
Occupy your current property for another five months while your new house is under construction to qualify for the capital gains exclusion on the sale of your primary residence.
Federal income tax rate on your sale profit if you sell now will be 15%, and SC state taxes will take 5%.