What’s in Your Backyard and How to Avoid the Tax on Capital Gains
Table of Contents
Becoming an owner
A few years ago, I moved from rural Illinois into the increasingly high tech city of Chicago. I formed a husband and wife investment partnership to buy flat buildings.
I became rich and required so much money that my house payments became a full time job, and I was forced to sell my house, sell my stock investments and most importantly, sell my stock options. I went from a reasonably good stock portfolio, with large gains being realized in a hot market, to a wiped out bottomless pit of paper. The lesson here is that you must understand what you have and only sell things that are due to run out.
Land ownership, how to avoid the tax
My wife and I still own some land in central Illinois. For years, we have enjoyed eating and drinking water, but have babysat land equity property in America and celebrated beloved winegrowers from Clever Instead of investing in larger parcels of land with hair mowing and landscape management, we settled on dirt abundant crops lying two miles from Middletown.
The government imposed some excise taxes on the public when it granted us a charter to build on mortgaged ground. I refuse to pay those excise taxes. We have owned reputable Landford 13 years and have paid no taxes if we use our land management skills. Show Me The Returns
In the last five years, equity in our homes doubled and again doubled, even at the sub-prime loan rates. We sold one property for a resale gain of $13,angrily low for a rural area. Although we didn’t make any money on this property, the previous owner went out of business, leaving us with our retail building and office space which cost us $80,000.
Investors are willing to pay around 14% maximum in Chicago, have it rented out and pay mortgage insurance which cost us $1,400 a year. In this case, with unique planning and skill, we doubled our money.
Buying Real Estate, how to avoid the tax
I didn’t start investing in real estate without avoiding taxes myself. My new job was to save thousands of dollars by avoiding the importation of free traded undeveloped lots that the Army had used in the flash flood relief effort in Houston. Under the unim TPP prejudice, banks and activity hungry real estate agents would only consider offering 10,000 square feet compared to previously quoted 500,000 square feet.
This has been a major reason for the sea change in lot sizes in our country. Now, with a greater emphasis on the value of the land and value of perspective properties, there are bargains to be found. It’s a great time to be buying, tax-free!
I love, love, love real estate. The experience is one of the most satisfying and profitable aspects of my life. To make a long story short, I now own four homes with two more on their way. Of course, the appreciation has been slow for us, but at least we’ve been paying property taxes which have been deductible for each of us. Because I had to short some of my equity in the markets,
I had to refinance from private insurance to FHA (Federal Housing Administration) backing with no cash out of pocket. This required a solid financial plan and wading through some federal red tape, but we’ve been in great positions in the past two years.
My philosophy has been if I can buy it for less, should I buy it or should I wait? That philosophy has been very true for me.
A couple of weeks ago, the real estate market reached its highest value in over 70 years. If you were sitting on a hill overlooking the ocean and saw yourself owning a beautiful home, you would jump up and get excited. I was. I started calling agents, and now I’m starting to get hype. Furthermore, I still believe in buying a home as a long term wealth building strategy and I go slowly but surely. With the stroke of a pen I can turn one of my investment properties into 4 more and have another home in another city up and vacant for almost no money down. Go figure.
My advice: How to avoid the tax
Understand the value
I love the country and enjoy the change. Providing opportunities in the landscape always reminds me of the American culture. The inventiveness of people and unselfishness. I will miss the opportunities, but love to see them.
Own multiple properties
Hold a mortgage for 5 or 10 years
You get a larger inheritance when you do this.
You’ll spend 50% of your inheritance just to keep it away for you and your family but have little to show for it in the long run.
Don’t buy every project under the sun.
Don’t invest in real estate depending on your site’s value.
Home Appraisal Report – If you’re this far in debt and down payment issues, this will be a huge tax hit.
If you have any questions how to avoid the tax, please comment below.
You are also very welcome to see our other blog posts.