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Posted: 8/26/2005 1:19:36 AM EDT
[#1]
I think you only have to pay capitol gains taxes if it is a second home.
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Posted: 8/26/2005 1:24:38 AM EDT
[#2]
You get an exemption of the first $250K in capital gains if you have lived in the house at least 2 of the last 5 years. If you are married and your wife has lived in the house 2 of the last 5 years you can exclude $500K in gains. This only applies to federal taxes. For state taxes you will have to check locally.
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Posted: 8/26/2005 9:09:40 AM EDT
[#3]
They did away with the exemption for re-investing in another house within x years...and substituted the $250K thingy...screwing us single folks yet again.
I will be facing this next year when I sell my house. As I understand it, there are 3 or so different levels of CG tax depending on your income. |
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Posted: 8/26/2005 9:19:31 AM EDT
[#4]
Nailed it. Escrow closes next Tuesday for me. After commissions and all the other cost of sale expenses I'm going to come in just a tiny bit above the 250k cut off so .fed won't be getting hardly anything from me on cap gains. 
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Posted: 8/26/2005 9:25:12 AM EDT
[#5]
Last year I sold a home in VA. Gains were 65+ plus. I went to H&R Block and they advised I owed $16,000 in income taxes. I then went to a CPA and he advised me I owed $300.00.
Moral of the story, get a second opinion and don't use part time H&R block "service" centers. |
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Posted: 8/26/2005 9:29:14 AM EDT
[#6]
www.irs.gov/newsroom/article/0,,id=106951,00.html f you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years. To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. You also must not have excluded gain on another home sold during the two years before the current sale. If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount. To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use. Longer breaks, such as a one-year sabbatical, do not. If you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home due to health, a change in place of employment, or certain unforeseen circumstances. Unforeseen circumstances include, for example, divorce or legal separation, natural or man-made disaster resulting in a casualty to your home, or an involuntary conversion of your home. If you can exclude all the gain from the sale of your home, you do not report any of that gain on your federal tax return. If you cannot exclude all the gain from the sale of your home, use Schedule D, Capital Gains or Losses, of the Form 1040 to report it. For more details and information, download a copy of Publication 523, Selling Your Home, or order it by calling toll free 1-800-TAX-FORM (1-800-829-3676). |
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Posted: 8/26/2005 9:32:42 AM EDT
[#7]
Ding Ding Ding. We have a winner. |
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Posted: 8/26/2005 9:48:20 AM EDT
[#8]
I just went to a CPA who said that the 250K is devided by the amount of months you lived there. So I've lived in my house 15 months, so 250/24 is 10.4K times 15 months is 156K, so I can write off 156K of gain on the house. Should I question her? She says it's prorated based on time at the residence.
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Posted: 8/26/2005 10:21:18 AM EDT
[#9]
She's right. Here's a link to the IRS publication: www.irs.gov/pub/irs-pdf/p523.pdf Page 15 is the worksheet covering exactly this. |
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Posted: 8/27/2005 2:18:26 PM EDT
[#10]
okay...I don't understand what the 24 figure is in that example. Math is not my best subject. 
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Posted: 8/28/2005 6:41:40 PM EDT
[#11]
To explain it in an easier format, he's owned it 15 of the 24 months, so he gets 15/24ths of the 250,000 exemption. 250,000/24 * 15 is the same as 15/24 * 250000, he wrote it using the first, but the second fits the way most people would mentally approach it. |
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Posted: 8/28/2005 6:48:57 PM EDT
[#12]
...also Google "1031 exchange"
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Posted: 8/28/2005 6:51:36 PM EDT
[#13]
On the other hand, if you ower capital gains, you will only owe 15% due to the Bush tax cuts
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