Selling a home, can I purchase a new truck with proceeds to avoid capital gains?

Oh please.... get a company to manage it for you, use it as a tax shelter and get insurance on it. The benefits that could come from it, especially because it is paid for are greater than the amount of money you could get out of it by selling it.

If you have a good CPA or financial advisor, they would say the same thing.

 

My wife is a CPA and I have studied everything encompassing macro economics for 15 years. I started driving as a way to get back out of the ivory tower world of finance and be more normal..

A lot of these people have no idea what they are talking about... There is also a good chance your accountant doesn't either since a lot of CPAs only knew enough to get through the test and have no idea of tax law. A lot of college students are the same way. They study for the test and then forget most of the information a month later.

Capital Gains on a house works like this (Federal).... Anything up to a $250,000 profit is not taxed. After that is Capital Gains... Which is currently at 15%.

Now, you screwed up by renting out the house. That took the property from personal use to commercial and now you are in a different world. So, that $250,000 exemption no longer applies. I could go on and on about how you should have pursued information before renting the place out.. But, whatever. I am a stock trader and wanted to expand into other areas so I put my wife through college an got her a job at a CPA firm only to have her divorce me. So I made mistakes too.

Needless to say... There are ways to avoid tax liability. If this house is worth a ton of money and it is worth the costs, you can set up a charitable trust and put the home and assets into that. Then you only pay 20%.... You can set up a REIT which would be great for a rental property, but then you can't buy a truck. Then there is a LLC or full blown corporation, but then your tax rate goes up to 35% if you ever fail to reinvest profits.

Either way, I agree with another poster... a trucking forum is not the place for this... talk to a tax lawyer, it will be worth the $300 an hour to get the right advice.

 

One other note....

My wife and I are getting a divorce, so I went around looking for someone to do my taxes. My wife used to do them. Three CPA firms that charged me out the ### to do my taxes couldn't not calculate simple wash sale adjustments. These are licensed CPA firms in the state of IL !!

CPAs are a very mixed bag and most of them are nothing more than glorified book keepers.... When it comes to tax law, while there are knowledgeable CPAs... It's like finding a top rate mechanic. Because there are so many screwballs pretending to be CPAs, it is impossible to know the good ones from the scams. You go to a tax attorney... You pay $300 an hour instead of $75 an hour... But, you are guaranteed to get the best advice.

I ended up doing my own taxes and went from owing a ton of cash the CPA firms said I owed to getting a $1000 back...

 

You have to pay Capital Gains but it will be a minimal amount. You don't pay tax on the whole sale amount - only the amount that it has increased since you inherited it. It is called "Stepped up Basis". If your accountant doesn't know that or does and failed to tell you, run like hell and find a competent professional.

 

Trucks devalue and are way riskier than property in general.
The other side I don't see mentioned here is that unless you pick up a piece of RE really cheap the return on investment with a truck is much higher.
If you got semi decent work for a truck you can make more money quicker with a truck then on RE.
With 600k if you had semi decent work for 4 or 5 trucks you could do way better than on property.

Between trucks and RE investment there is no concrete best answer as there are many factors specific to your situation.
Abilities , opportunities and timing make the difference.
For me 20 years ago trucks , now property.

 

Well , the trucks can make you money quicker , real estate can depreciate too pending on the market. They will always make more trucks, but they don't make any more land, so why not a little bit of both? Get a truck go from company drivers to Team Owner operators working under someone elses authority ie. Landstar etc. and triple your revenue that you were making as meat in the seat (company drivers) then take the revenue from the trucks and invest in real estate and be OTR landlords and continue doing what you love, pends on what will best fit your needs I guess. Sorry can't comment on capital gains, as I look at investing/markets/stocks as a rich mans casino.. I don't think you can go wrong owing both, it's a risk either way.. Good Luck, I would be curious how things play out for you.

 

If I were you and I didn't plan on living there in the house I would sell it. You played landlord, got the taste for it and decided it wasn't for you. If you are indeed 1000s of miles away from it sell it. If you have to pay taxes, which if it's indeed 614k worth you will. The powers that be will want their piece on your profits.

Now about the issue of buying a truck with the proceeds. The rule of thumb is never to buy anything on payments that depreciates if you aren't willing to buy it outright. So if you were to sell the house, sell it. But not because you want to buy a truck. These are two different transactions. Sell the house, because you don't see yourself in it, pay taxes on it and then buy a truck with cash.

Now all this advice is based off if you aren't in any debt whatsoever. AND make sure you and wife want to be owner operators and know what it takes to run your business successfully.

 

This is my understanding on inherited property as well.

 

I'm getting 2k16 vnl 780 too. House on wheels