Hi, does anyone know what is the tax implication if I have $500,000 deferred tax from 1031 exchange, then 2 years later sell the investment property for $100,000 more in gain? I'm trying to plan to reduce the tax without doing another 1031. So I will have in total $600,000 long term capital gain.
(1) If I planned to have my short term disability for 9 months of the year to take care of a new born, will only 3 months salary count as my tax bracket and I can avoid paying federal tax on that $600k long term capital gain? (Depreciation recapture would be around $60k) Assuming head of household and income for 3 months is less than the $50k braket.
If not I would have to pay approximately $90,000 Federal LTCG plus $15,000 recapturr plus state tax.
What happens with couples starting their retirement and the SSI will be well below the tax bracket to pay 0% tax? Why don't we see a lot of that tax planning to take advantage of the realizing gain on long term capital gain on those retirement years? The only thing I heard is to transfer to your children when you are dead, or staying in there for 2 years among previous 5 years (but you still have to prorate the gain among those years)
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