I moved in with my fiance. I originally bought the house for 95, sold it for 100. After sales commission and paying off loan, I ended up with $7,000.00. Do I have to pay tax on this or do I have a certain amount of time to reinvest in another home? This was my first home so I am not sure how it works.
2006-12-19 02:38:23 · 4 answers · asked by Stacy S 2 in Business & Finance ➔ Taxes ➔ United States
If you owned the home and lived in it for at least 2 of the past 5 years, then you are exempt from up to $250,000 of gain. To find your gain: Sales Price-closing costs-Purchase price-Improvements on the house. If this total is less than $250,000 and you met the requirements(2 of last 5 years) then you don't have any gain. If you didn't meet the 2 of last 5 years rule, then your gain is taxable. Losses are non-deductible.
2006-12-19 02:46:33 · answer #1 · answered by Dana B 2 · 0⤊ 0⤋
First of all, if you bought it for 95K and sold it for 100K, by the time you paid commissions on both ends, you almost surely didn't have a gain, so wouldn't owe anything for federal or for state. The $7000 you ended up with has nothing to do with it - that's basically a return for what you paid in payments for the house, so is just getting your own money back, which isn't taxable. The taxable amount is sale price minus purchase price minus allowable expenses (like commissions).
But even if you had a gain, if you owned and lived in the house for at least two of the last five years, you could exclude up to $250K of the gain from your taxes. Depending on the state, the rules in the state might be different. But since you probably didn't have a gain anyway, it shouldn't matter.
The IRS rule about selling a house and having to reinvest the money in another property within a certain time limit to avoid paying tax has been gone for several years.
2006-12-19 03:00:17 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
It may vary from state to state but in NC, if you live in a home for more than 2 years and is considered your primary address, then you don't have to claim the capital gains. If you lived in it less then two years, you do have to claim it. You are expemt from the capital gains only one time.
2006-12-19 02:47:56 · answer #3 · answered by surelycoolgirl 5 · 0⤊ 1⤋
you need a tax man, to do your tax, also ask your real estate agent
2006-12-19 07:01:53 · answer #4 · answered by justmejimw 7 · 0⤊ 0⤋