I bought a townhouse about six years ago in Arizona. I lived in for a while, but then moved to New Jersey and decided to rent it out. I only own that property and now would like to sell it and buy a primary residence in New Jersey. My income is under $35k/year and will be profiting $100k or so on the townhouse. What amount of capital gains taxes are associated with this scenario and are there ways to avoid or lower them?
Thank you in advance!
I have some follow up thoughts/questions. If I were to take the profits from the rental property and do a 1031 exchange... can I live in the property as well as use it for business? Say airbnb or run my massage business out of it or my fiance's painting business or all three? Also, would the new property need to be of equal to or great than the sale price of the sold property or just all of the profit?
Lastly, my income puts me in the 0% capital gains bracket, but from what I'm understanding I would still need to pay 15% on any profits that brings my income past $40,400. This is if I dont do the exchange of course. Do I have this right or no?
Thank you so much!
