Selling a home....capital gains?
- Thread starter Cody
- Start date
- Location
- Never Far From Nowhere
Looking to get out of the ghetto?
soda blaster
Active Member
- Location
- Saratoga Springs
If you reinvest it back into a home or property you will not be hit with capital gains. But you better be ready to prove it.
BCGPER
Starting Another Thread
- Location
- Sunny Arizona
You're ok as long as the next place is more expensive. But I've got to wonder, do you think considering the market right now and the short time you've owned it, that a capitol gain will be a real issue?
If you do turn a profit in that short of time frame, then surely you've done many improvements. You did save those reciepts, right? That should easily offset any gain. Dig up enough recipts, and you can probably sell it at a loss.
If you do turn a profit in that short of time frame, then surely you've done many improvements. You did save those reciepts, right? That should easily offset any gain. Dig up enough recipts, and you can probably sell it at a loss.
If I sell it at a loss, then I can't afford the other home.
My home is under 200k, and there isn't a surplus of homes out there that are in livable shape for under 200k. If I can get 185 out of my pad, I can get into this other house Im looking at.
It's the market over 250 that is really saturated. Rates are pretty low again, so if I can move my house fairly quickly I can take advantage of the buyers market on homes over 250k and get a good deal on a much nicer home back in my old hood.
My home is under 200k, and there isn't a surplus of homes out there that are in livable shape for under 200k. If I can get 185 out of my pad, I can get into this other house Im looking at.
It's the market over 250 that is really saturated. Rates are pretty low again, so if I can move my house fairly quickly I can take advantage of the buyers market on homes over 250k and get a good deal on a much nicer home back in my old hood.
He's talking tax-wise, if you've put more money into your home than you will be selling it for maintenance and improvement wise.
Well, a lot of the improvements weren't super expensive. Painting, some tile work (which was free), and some yard work. I really couldn't add up more than maybe 1000 in receipts, but yes I have those if necessary.
We'll see. It's just wishful thinking, but I'm hoping that tax credit and the lower rates will get 1st time buyers back into the market, and my home is perfect for someone like that.
We'll see. It's just wishful thinking, but I'm hoping that tax credit and the lower rates will get 1st time buyers back into the market, and my home is perfect for someone like that.
RockMonkey
Suddenly Enthusiastic
I've got a friend who is an IRS auditor, and he waited 2 years to sell his home to avoid capitol gains, and he is definitely moving up. How long have you been there?
Bucking Bronco
................
- Location
- Layton
It is my understanding that you have to stay 2 years even if you are upgrading. if you are there longer then 2 years you are good but you still have to upgrade, if you were to down grade then you would have to pay.
there at one time was one time exemption you could use but you probably would not want to use that unless you were looking at a serious amount of money.
there at one time was one time exemption you could use but you probably would not want to use that unless you were looking at a serious amount of money.
Yoda55
GET DOWN, DO YOU?
- Location
- Sugarhouse, Utah
as long as you & the sweetie don't make (adjusted gross income) over 500 K in that year of the sale..
If this is your primary residence, you need to invest all gains to new home if under the 2 yr mark in the last 5 yrs. as you can see there are a lot of dumb rules so call your tax consultant. If you need some of the $ after closing there is a easy & free way to get access to it. PM me and we can talk.
I'm not giving tax advice you can call any CPA, Tax consultant.
here is some info off the web.
see
http://www.irs.gov/faqs/faq10.html
Sale of Your Home
Capital Gains Taxes
By William Perez,
* selling your home
* taxation of real estate
* capital gains
If you sold your main home and made a profit, you may be able to exclude that profit from your taxable income. Here's how it works.
$250,000 Exclusion on the Sale of a Main Home
Individuals can exclude up to $250,000 in profit from the sale of a main home (or $500,000 for a married couple) as long as you have owned the home and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.
You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home. Generally, you can claim the exclusion only once every two years. Some exceptions do apply.
Exceptions to the 2 out of 5 Year Rule
If you lived in your home less than 24 months, you may be able to exclude a portion of the gain. Exceptions are allowed if you sold your house because the location of your job changed, because of health concerns, or for some other unforeseen circumstance.
Change in the Location of Your Job
If you lived in your house for less than two years, you can exclude a part of your gain on the sale of your house if your work location has changed. This exception would apply if you started a new job, or if you are moved to a new location with your employer.
Health Concerns
If you are selling your house for medical or health reasons, be ready to document those reasons with a letter from your physician. Such a letter does not need to be filed with your tax return. Instead, keep the documentation in your personal records just in case the IRS wants further information.
Unforeseen Circumstances
If you are selling your house because of unforeseen circumstances, be ready to document what those reasons are. IRS Publication 523 defines an unforeseen circumstance as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." The IRS has given specific examples of unforeseen circumstances:
* natural disasters,
* acts of war,
* acts of terrorism,
* change in employment or unemployment that left you unable to meet basic living expenses,
* death,
* divorce,
* separation, or
* multiple births from the same pregnancy.
Partial Exclusion
You can exclude a portion of your gain if you are selling your home and lived there less than 2 years and you meet one of the three exceptions. You calculate your partial exclusion based on the amount of time you actually lived in your home.
Count the number of months you actually lived in your home. Then divide that number by 24. Then multiply this ratio by $250,000 (if unmarried) or by $500,000 (if married). The result is the amount of gain you can exclude from your taxable income.
For example: you lived in your home for 12 months, and then sold the home because your employer asked you to relocate to a different office. You are an unmarried person. You calculate your partial exclusion: 12 months divided by 24 month (for a ratio of .50) times your maximum exclusion of $250,000. The result: you can exclude up to $125,000 in gain. If your gain is more than $125,000, you include only the amount over $125,000 as taxable income. If your gain is less than $125,000, then your gain can be excluded from your taxable income.
Loss on the Sale of a Home
You cannot deduct a loss from the sale of your main home.
Reporting the Gain on the Sale of Your Home
Gain on the sale of your home is reported on Schedule D as a capital gain. If you owned your home for one year or less, the gain is reported as a short-term capital gain. If your owned your home for more than one year, the gain is reported as a long-term capital gain.
Calculating Your Cost Basis and Capital Gain
Just like calculating capital gains, the formula for calculating the gain or loss involves subtracting your cost basis from your selling price.
The formula for calculating your cost basis on your main home is as follows:
* Purchase price
* + Purchase costs (title & escrow fees, real estate agent commissions, etc.)
* + Improvements (replacing the roof, new furnace, etc.)
* + Selling costs (title & escrow fees, real estate agent commissions, etc.)
* - Accumulated depreciation (for example, if you ever took the office in the home deduction)
* = Cost Basis
And then calculating your profit or loss would be:
* Selling price
* - Cost Basis
* = Gain or Loss
If the resulting number is positive, you made a profit when you sold your home. If the resulting number is negative, you incurred a loss.
Finally, calculate your taxable gain:
* Gain
* - Maximum or Partial Exclusion
* = Taxable Gain
Additional Resources from the IRS
* Sale of Your Home (Tax Topic 701)
* Selling Your Home (Publication 523)
* Tax Information for First-Time Homeowners (Publication 530)
* Instructions for Schedule D
More Tax Planning: U.S. Quick Tips
If this is your primary residence, you need to invest all gains to new home if under the 2 yr mark in the last 5 yrs. as you can see there are a lot of dumb rules so call your tax consultant. If you need some of the $ after closing there is a easy & free way to get access to it. PM me and we can talk.
I'm not giving tax advice you can call any CPA, Tax consultant.
here is some info off the web.
see
http://www.irs.gov/faqs/faq10.html
Sale of Your Home
Capital Gains Taxes
By William Perez,
* selling your home
* taxation of real estate
* capital gains
If you sold your main home and made a profit, you may be able to exclude that profit from your taxable income. Here's how it works.
$250,000 Exclusion on the Sale of a Main Home
Individuals can exclude up to $250,000 in profit from the sale of a main home (or $500,000 for a married couple) as long as you have owned the home and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.
You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home. Generally, you can claim the exclusion only once every two years. Some exceptions do apply.
Exceptions to the 2 out of 5 Year Rule
If you lived in your home less than 24 months, you may be able to exclude a portion of the gain. Exceptions are allowed if you sold your house because the location of your job changed, because of health concerns, or for some other unforeseen circumstance.
Change in the Location of Your Job
If you lived in your house for less than two years, you can exclude a part of your gain on the sale of your house if your work location has changed. This exception would apply if you started a new job, or if you are moved to a new location with your employer.
Health Concerns
If you are selling your house for medical or health reasons, be ready to document those reasons with a letter from your physician. Such a letter does not need to be filed with your tax return. Instead, keep the documentation in your personal records just in case the IRS wants further information.
Unforeseen Circumstances
If you are selling your house because of unforeseen circumstances, be ready to document what those reasons are. IRS Publication 523 defines an unforeseen circumstance as "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home." The IRS has given specific examples of unforeseen circumstances:
* natural disasters,
* acts of war,
* acts of terrorism,
* change in employment or unemployment that left you unable to meet basic living expenses,
* death,
* divorce,
* separation, or
* multiple births from the same pregnancy.
Partial Exclusion
You can exclude a portion of your gain if you are selling your home and lived there less than 2 years and you meet one of the three exceptions. You calculate your partial exclusion based on the amount of time you actually lived in your home.
Count the number of months you actually lived in your home. Then divide that number by 24. Then multiply this ratio by $250,000 (if unmarried) or by $500,000 (if married). The result is the amount of gain you can exclude from your taxable income.
For example: you lived in your home for 12 months, and then sold the home because your employer asked you to relocate to a different office. You are an unmarried person. You calculate your partial exclusion: 12 months divided by 24 month (for a ratio of .50) times your maximum exclusion of $250,000. The result: you can exclude up to $125,000 in gain. If your gain is more than $125,000, you include only the amount over $125,000 as taxable income. If your gain is less than $125,000, then your gain can be excluded from your taxable income.
Loss on the Sale of a Home
You cannot deduct a loss from the sale of your main home.
Reporting the Gain on the Sale of Your Home
Gain on the sale of your home is reported on Schedule D as a capital gain. If you owned your home for one year or less, the gain is reported as a short-term capital gain. If your owned your home for more than one year, the gain is reported as a long-term capital gain.
Calculating Your Cost Basis and Capital Gain
Just like calculating capital gains, the formula for calculating the gain or loss involves subtracting your cost basis from your selling price.
The formula for calculating your cost basis on your main home is as follows:
* Purchase price
* + Purchase costs (title & escrow fees, real estate agent commissions, etc.)
* + Improvements (replacing the roof, new furnace, etc.)
* + Selling costs (title & escrow fees, real estate agent commissions, etc.)
* - Accumulated depreciation (for example, if you ever took the office in the home deduction)
* = Cost Basis
And then calculating your profit or loss would be:
* Selling price
* - Cost Basis
* = Gain or Loss
If the resulting number is positive, you made a profit when you sold your home. If the resulting number is negative, you incurred a loss.
Finally, calculate your taxable gain:
* Gain
* - Maximum or Partial Exclusion
* = Taxable Gain
Additional Resources from the IRS
* Sale of Your Home (Tax Topic 701)
* Selling Your Home (Publication 523)
* Tax Information for First-Time Homeowners (Publication 530)
* Instructions for Schedule D
More Tax Planning: U.S. Quick Tips
rockreligious
NoEcoNaziAmmo
- Location
- Ephraim
wow, was going to post up but Yoda printed out half the homeowners tax code.(good Job)
some of the investment exchanges that were posted about earlier require proper paperwork before hand in order for the exchange to be valid and non-taxable.
some of the investment exchanges that were posted about earlier require proper paperwork before hand in order for the exchange to be valid and non-taxable.
Well, 2 years will be December 28th of this year. My plan was to take the $$ I made from the sale of the home and use it to pay off my credit cards. I suppose that doesn't count towards "buying" a new home even though it would be necessary for the sale to go through.
Would documentable family health problems count possibly? Part of the reason I want to make this move it to be closer to my parents because of their medical issues
Would documentable family health problems count possibly? Part of the reason I want to make this move it to be closer to my parents because of their medical issues