What are the tax consequences of selling my condo at $400,000 profit after having it for 20 years?

It was never a primary residence. We want an easy way to get the cash out of the property, nothing complicated. There is a trust setup but we want to invest the cash elsewhere.

If your condo was your primary residence for at least 2 of the last 5 years ending on the date of the sale and you are NOT married, you can deduct $250,000 of your "gain" of $400,000. You will then have $150,000 of capitol gains subject to federal taxation.

If you are married, and you satisfy the primary residence term described above, you can deduct up to $500,000 of gain on the sale. In your case, you would not pay any federal taxes on your $400,000 gain.

you pay a capital gain tax and if the money is personal, you pay income taxes on that.

There are 3 things you can do;;;.

1. Pay15% long term capital gain tax

2. Refinance the property and get your equity out so long as you new investment earns more than your mortgage payment.

3. Do a 1031 tax deferred exchange. You can get info on 1031through the NET.

It was never a primary residence therefore you will pay long term capital gains of 25% Your capital gain will be computed based on the difference between your basis and the sales price. You pay taxes on the gains as your receive them therefore I suggest that you consider selling owner financed, this will insure that you get all your profits after the tax is paid by the interest you charge the buyer. In the event that you need to get more cash out to invest on another real estate property you can use the owner financed contracts as collateral with the lender and let the borrower pay for that loan.

If you just need money and want to avoid paying taxes, a re-finance is probably your best bet (you'll get a loan on your equity and you don't have to sell the property, so there is no tax consequences). If your new investment pays more than the interest of the cash-out refinance you'll be OK. If your new investment is another property, you can defer taxes by doing a 1031 exchange (you can read about it here: http://www.1031.org/about1031/faq.htm ).

Good Luck.
Mario
http://www.GoodNeighborBuysHouses.com