Question:
We have owned this condo in Destin, Florida for 15 years. It sits across the street from the beach where Pampano Joe's is on Old 98. Our son is now 13 and we want him to see more than Destin. We are thinking of putting it on the market. The only thing that is holding us back is the "capital gains tax". Seems like by the time we sale it and pay them plus real estate fees it is not worth it.

Anyone have any good insights in this capital gains business? Any loopholes? It is not that we want to be dishonest in any way, but the Government ends up getting everything! We renovated and made this our second home. We never rented so we never benefited from it on taxes.

Thank you in advance.

Answer:
The only possible loop hole would be to establish this condo as a "principal residence". If, during the 5 years ending with the year of sale, you owned and used the property as a principal residence for a cumulative 730 days then the gain is excludible up to a maximum of $500,000 for married/joint or $250,000 for single.

Failing that, the taxable gain is the net of the sales price less a) original cost + b) cost of improvements + c) costs of the sale (including commissions). And, the capital gain tax rate is (usually) significantly lower than the rate on ordinary income.

Don't forget to factor in the costs of continued ownership (interest, taxes, insurance, etc) you can avoid by making the sale.

Good luck, and you're welcome.