Dean Rizzi

Why Real Estate?
January 18, 2011 · · 3 Comments

Everyone likes real estate, whether what’s constructed on it serves as an abode or an investment. Real estate is tangible. Unlike stocks and bonds, real estate can be touched, handled and improved. Real estate provides “psychic revenue.” There is a pride of ownership that comes with real property that doesn’t come with other property.

Financial media are rife with articles on why owning residential real estate isn’t such a good idea. They point to arguments on how real estate decreases mobility or how much it costs to maintain. The articles have some validity, but they are often marked by glaring omissions. Yes, real estate can limit mobility in a slow economy, but it has always been that way. There is nothing new to this point.     Read more

Ron Ricard - Investment Property Exchange Services, Inc

Converting your Primary Residence into Rental Property
September 2, 2009 · · 5 Comments

The tax code allows you to keep some or all of the gain on the sale of a primary residence if you meet certain conditions.  IRC §121 permits the exclusion of realized capital gain of $250,000 for a single person and $500,000 for a married couple upon the sale of a home that was their primary residence for any two years during the five years preceding the sale.  If your gain is in excess of this exclusion, you may have to pay capital gain tax on the amount over the exemption.  This exemption cannot be used more than once every two years.

 Let’s assume you have lived in your home as a primary residence more than two years, but decide to move out and turn the property into rental housing.  If you sell the property less than three years after you move out, you still qualify for that primary residence exemption of $250,000 or $500,000.  So if your gain (profit) is less than those thresholds, you will have no tax to pay on your gain, though you will have to pay depreciation recapture tax on the amount that you depreciated the property while it was a rental.   Read more