I was investigating the consequences of selling the tiny house and ran across something.
If the sale of the tiny house is treated as a capital gain, then I need to consider whether it is a short term or a long term gain. According to the Turbo Tax site, you must own the asset for over one year to be considered a long term gain.
A short term gain is taxed at the 35% rate while a long term gain is taxed at 0-15% depending on your tax bracket. So if the tiny house sold for $15K, we be talking about a tax liability of $2275 (assuming cost basis of $8500) if I sell it before February 22nd or $975 if I sell it after.
That kinda seems like a good reason to hold on to it for another month to let it become a long term asset. And until I sell it, I can continue to depreciate it as business property. When I either sell it or move in to it, I’ll have to stop the depreciation.