Does The 5 Year Minimum Hold Rule Still Hold Up?

It depends on if you’re doing upgrades. I think you can make quite a bit of money updating and taking advantage of the tax free capital gains if you’re willing to move every 2-3 years.

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Moving is a big headache

It’s even better to buy and hold, never sell. Your tax savings is eaten up by transaction costs. Commission, title fees, mortgage fees, vacancy cost, transfer tax will be easily 15% of your profit.

Commission alone will take 10% of your profit assuming a double. I can’t find a better tax strategy than never sell.

The only reason to sell is to buy a better one.

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How will commission eat 10%? The seller is always paying it, so you don’t pay it when you buy. Never sell assumes you can be cash flow break even or you can indefinitely support the monthly negative cash flow. Doing that will impede your ability to buy the next house.

Who really pays it? :slight_smile:

If you buy a house at 500k and it doubles to 1M. You sell and pay $50k commission. Isn’t 50k commission the 10% of your 500k tax free profit? You may save 20% capital gains tax, but you pay 15% on transaction cost.

I’m thinking to never sell the primary home and turn it into a forever rental property. Unless Prop 10 forces me to sell.

Ah, you mean pay 15% of the profit.

Makes more sense if your cost basis is really low. If you buy at 100k and sell at 600k, transaction cost would become a smaller percentage of your profit.

On the contrary, if you buy a $2M house and sell at $2.5M. You transaction cost would make the tax savings even more insignificant.

Therefore, the 500k exclusion is only useful for low cost areas. Not worth selling in High cost areas

tax tax tax tax. either way , gov wins.

@dioworld, I don’t know your house address, but I estimate that you will save 150k tax on federal and state income taxes and spent 60k on transaction cost. Is it accurate? :rofl:

If you buy another rental house in California, you’ll need to pay 5k extra property tax per year.

But if you want to use the proceeds to buy a house in Hong Kong now, you better sell now to save tax on the 500k gain. 1031 exchange doesn’t cover foreign real estate, right?

shit, you know everything…
very close very close

i’ll reinvest in housing 100%, just don’t know the time & location.

BAGB is like my dad, i inherit this behavior too, we like to calculate for other ppl hahaha

I am doing a general calculation and your house suddenly become a perfect example :rofl: You are the representative of DC

not only that, for example after 3 yrs, my house went up another 270k, by that time i sell, probably i make break even as now.

You can 1031 exchange and pay no tax. Later give the house away to a charity or a kid

yes, only 1031, but who knows BA environment at that time right? maybe we’ll ahve to pay 100k to kick tenant out and they won’t get out

If you are selling due to market risk, that’s totally a different consideration, nobody knows. This thread is focusing on tax only and there are many other non-tax considerations.

yes, you’re correct.
But for myself, since eventually i’ll move back to hk. if next year or two able to nail down a good primary home, i’ll be happy.
HK requires a lot of downpayment. unless brand new

Strong dollar will help you

thanks, hk market slowing down now. looks like the bull run is almost over.
if that happens, i’ll strike