Selling DVC

[roth697]

My wife and I are thinking about selling two of our contracts. Does anyone know if we would have to pay Capital gains tax on the payout from the sell? If so, is it based only on whether we sell at a higher per-dollar point rate than what we bought it at?

Example: 100 point contract (Bought for $100.00 pp) - sell contract for $112.00 pp. Would we only pay capital gains on $12.00 per point extra?

 

[mort1331]

where are you located?

 

[roth697]

Maryland

 

[Dean]

My wife and I are thinking about selling two of our contracts. Does anyone know if we would have to pay Capital gains tax on the payout from the sell? If so, is it based only on whether we sell at a higher per-dollar point rate than what we bought it at?

Example: 100 point BLT contract (Bought for $100.00 pp) - sell contract for $112.00 pp. Would we only pay capital gains on $12.00 per point extra?

My understanding is yes minus and other costs such as closing. It'd actually be based on how much you got and paid, not the per point price per se. It really shouldn't be much, maybe $150 or less per each 100 points or so. It's likely your tax preparer can get it to all to zero out.

 

[JimMIA]

Yes, you might have to pay something, but as Dean says the taxable amount is the actual gain after all expenses are deducted, like broker commissions, any portion of closing you pay, other incidental costs, etc. If your gross profit is $12 per point, by the time you subtract commissions and costs, the tax will be negligible.

 

[supersnoop]

My wife and I are thinking about selling two of our contracts. Does anyone know if we would have to pay Capital gains tax on the payout from the sell? If so, is it based only on whether we sell at a higher per-dollar point rate than what we bought it at?

Example: 100 point BLT contract (Bought for $100.00 pp) - sell contract for $112.00 pp. Would we only pay capital gains on $12.00 per point extra?

Yes, you'll pay capital gains taxes on any gain from the sale. Your basis will be what you paid including closing costs, plus some adjustments for capital reserves.