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Posted: 9/8/2004 12:29:48 PM EST
If I bought the house 7 years ago for $52,000 and sold it for $75,000, what would happen? Would I get taxed on the $23,000 I made? I've also put about $30,000 of work into it (though a lot of the labor was my own) but I could probably come up with receipts for about $15,000. Would that have any effect on things?

Any other info would be greatly appreciated - thanks!
Link Posted: 9/8/2004 12:32:42 PM EST
I believe that it would be taxed as a long term capital gain, which is lower. You have $15k in expenses, so I figure it would be a wash....no profit so nothing to tax. Keep in mind I deal with timber, not houses.
Link Posted: 9/8/2004 12:34:48 PM EST
I bought a house last year and sold it within the year. I'm going to be taxed out my ass in April.
Link Posted: 9/8/2004 12:36:36 PM EST
Was it your residence, second home, or a rental? Have you sold any other residences in the last two years? That will determine the tax treatment.
Link Posted: 9/8/2004 12:39:48 PM EST
You have lived in the house for more than 2 yrs. That should mean no cap gains because the gain was under 500k. Didn't Billy Jeff sign that bill in his final term?
Link Posted: 9/8/2004 12:40:26 PM EST
[Last Edit: 9/8/2004 12:44:58 PM EST by JimmyT]
You no longer have to recognize gain on the sale of a principle residence assuming that you have owned and lived in the house for 2 years. It is excluded up to a certain amount (I forget the exact amount, but it's a couple hundred thousand) for each sale.

The old rule involved rolling the gain over against the basis of your new house with the effect of a permanent deferral of the gain as long as the cumulative gain did not exceed something like $650K.

Either way, with the facts you have presented and assuming you meet the criteria, you don't have an issue.
Link Posted: 9/8/2004 12:58:02 PM EST
This should give you an answer

And if it doesn't just research that IRS website.
Link Posted: 9/8/2004 12:58:23 PM EST
Schwing - thank god for that!
Link Posted: 9/8/2004 1:07:57 PM EST
ttp://www.fool.com/taxes/2000/taxes000428.htm

As others have said, not likely as it is primary residence. Most states follow the same guidelines.

Even if it were a rental you could defer through a 1031 Exchange (Starker).
Link Posted: 9/8/2004 1:21:05 PM EST
Well, it WAS my primary residence until December of 2003 - since then I have resided in another house I purchased. Would this cause a problemo?
Link Posted: 9/8/2004 1:30:55 PM EST
[Last Edit: 9/8/2004 1:33:33 PM EST by LadyLiberty]
no -- it just has to be any 2 of the last 5 years.
Link Posted: 9/8/2004 1:32:57 PM EST
[Last Edit: 9/8/2004 1:33:30 PM EST by Prefect]
No problem - you had to live in it for two out of the last five years, which it appears you have done. Maximum of $250,000/person exclusion available, so your sale is tax free (unless you've rented it out since December of 2003, in which you'd have to recapture any depreciation you deducted on your 2003 return as ordinary income).

Enjoy!
Link Posted: 9/8/2004 2:02:31 PM EST
[Last Edit: 9/8/2004 2:10:27 PM EST by nightstalker]

Originally Posted By Greywolf2112:
Well, it WAS my primary residence until December of 2003 - since then I have resided in another house I purchased. Would this cause a problemo?



Actually this new purchase has likely deferred your capital gain as long as the price of the new one exceeds the selling price of the old one (and is done in a certain time period-18 mos. I believe). All this carrys over until the time that the NET (cost-improvements) gain exceeds $250K for a single person or $500K for a couple in which case the tax is long term on the amount over $500K.

Our last sale was $630K on a house we bought 22 years ago for $158K so we were OK on capital gains without even considering the recent improvements we'd made.

All things being equal people might sell their property more often if there weren't capital gains taxes, thus generating higher property tax revenues and income for agents and even builders. There is an estimate of 7 trillion dollars of capital gains being held to avoid taxation. Something to think about.
Link Posted: 9/9/2004 5:28:14 AM EST

Originally Posted By nightstalker:

Actually this new purchase has likely deferred your capital gain as long as the price of the new one exceeds the selling price of the old one (and is done in a certain time period-18 mos. I believe). All this carrys over until the time that the NET (cost-improvements) gain exceeds $250K for a single person or $500K for a couple in which case the tax is long term on the amount over $500K.



Nope, these rules were discarded in 1996. $250K exclusion renews every two years, no deferral of gain occurs - the gain is simply excluded.

No requirement to "purchase up" either, regardless of what your real estate agent tells you.
Link Posted: 9/9/2004 5:55:22 AM EST

Originally Posted By Prefect:

Originally Posted By nightstalker:

Actually this new purchase has likely deferred your capital gain as long as the price of the new one exceeds the selling price of the old one (and is done in a certain time period-18 mos. I believe). All this carrys over until the time that the NET (cost-improvements) gain exceeds $250K for a single person or $500K for a couple in which case the tax is long term on the amount over $500K.



Nope, these rules were discarded in 1996. $250K exclusion renews every two years, no deferral of gain occurs - the gain is simply excluded.

No requirement to "purchase up" either, regardless of what your real estate agent tells you.



Yup...exactly...
Link Posted: 9/9/2004 7:30:29 AM EST

Originally Posted By IamtheNRA:

Originally Posted By Prefect:

Originally Posted By nightstalker:

Actually this new purchase has likely deferred your capital gain as long as the price of the new one exceeds the selling price of the old one (and is done in a certain time period-18 mos. I believe). All this carrys over until the time that the NET (cost-improvements) gain exceeds $250K for a single person or $500K for a couple in which case the tax is long term on the amount over $500K.



Nope, these rules were discarded in 1996. $250K exclusion renews every two years, no deferral of gain occurs - the gain is simply excluded.

No requirement to "purchase up" either, regardless of what your real estate agent tells you.



Yup...exactly...



I concur.
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