biophase
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Sale on the house is $2M, proceeds will be $1,880,000.
Profit $1,880,000 - $1,200,000 = $680,000
First $250,000 exempt in taxes
Second $250,000 maybe exempt in taxes
Remaining $180,000 taxed at 15 or 20% capital gains rate (not income rate)
If your father in law can qualify for the second $250k exemption in a few months, I would try to delay closing so that he does. You are talking about saving $37500 to $50000 by merely waiting a month or two.
The question on what to do with the $680,000. I'm not sure. But I would probably do something where they can only touch $100,000/yr for the next 6 years. You have to do something that limits access to it all. I'm not sure how you would structure that. But the big question is would they even agree to something like that?
Profit $1,880,000 - $1,200,000 = $680,000
First $250,000 exempt in taxes
Second $250,000 maybe exempt in taxes
Remaining $180,000 taxed at 15 or 20% capital gains rate (not income rate)
If your father in law can qualify for the second $250k exemption in a few months, I would try to delay closing so that he does. You are talking about saving $37500 to $50000 by merely waiting a month or two.
The question on what to do with the $680,000. I'm not sure. But I would probably do something where they can only touch $100,000/yr for the next 6 years. You have to do something that limits access to it all. I'm not sure how you would structure that. But the big question is would they even agree to something like that?