3 ms·
If I buy a house for 50k and want to immediately move laterally to another house worth 50k then the cost is 0 + overhead. If I buy a house for 50k and want to
by Shaanie 9y ago
If I buy a house for 50k and want to immediately move laterally to another house worth 50k then the cost is 0 + overhead. If I buy a house for 50k and want to move laterally when it's worth 100k then the cost is the taxes of the 50k profit + overhead.
This gets even worse if you want to buy a larger house (if appreciation is percentage based).
- notyourday 9y agoThat's not correct. In the second case: You bought a house for $50k, which in a year appreciated to $100k. You sell the house for $100k, pay the capital gains of X% on the $50k of appreciation which gets you $100k - ($50k * X% ) to play with. You lateral move would not be to a house worth $100k, it would be to a house worth $100k-($50k * X%) because you d not have $100k, you only have $100 - (50k * X%). If you wanted to defer capital gains and play with entire 100k, then instead of doing a sale you would do 1031 exchange.