Terry, One CPA tells me I can. Another CPA tells me I can not. I heard you can take the internet stocks capital loss from three years ago, and use it against this year’s stock market gains. Is this right? If so, can I use the internet stocks loss from three years ago, and use it against the capital gains from the sale of my second home this year, bought and sold short term(another story). A CPA friend told me YES. I want to make sure. Can I get the advise of the experts on this board? I don’t want the IRS to come to me asking for back taxes years down the road. Your advise/opinion is very much appreciated.
We recently sub divided our property into seven lots, which is zoned residential. Our principal residence is one of the seven lots. On one of the lots, we would like to build a new house. Would building a new house for ourselves on one of the lots help us in lowering our capital gains tax? If not, what is our best option for minimal capital gains when selling off the lots?
PS: Selling our principal residence is not an option at this time.
Expenses related to a personal residence, and not an investment property, are not business related and thus will not help with capital gains. In any event, building a new house, as opposed to making repairs to an existing structure, would have to be amortized (deducted pro-rata) over the entire life of the house (27.5 years, I think), rather than deducted all at once this year.
If you’ve lost money in the stock market – and if you haven’t, I need you to pick my stocks for me – you can deduct the losses against your capital gains. On December 30, 2002 I sold lots of losers in my portfolio to create such losses. You might consider doing the same, but remember that if you put the money right back into stocks, it can’t be the very same stocks unless you first wait for 30 days, or the “wash sale” rules will prevent you from taking a loss. If you have losses from prior years you weren’t able to use, you may be able to “carry forward” those losses and use them this year. Consult your accountant.
Terry L. Trimble
Law Offices of Terry L. Trimble, LLC
Baltimore, Maryland