if u sell a house and make a profit off of it, do u have to claim it on taxes??

Question

my friend sold a house and made a $8000 profit off of it.....does that count as income toward that year on taxes???

Answer 1

It may or may not be taxable. It depends upon several things.

If he lived in it as a primary residence for 2 of the 5 years prior to selling it he can exclude all of the gain. You can exclude up to $250,000 ($500,000 if married filing jointly) in gain on sale of a primary residence if you have lived in it for 2 of the 5 years immediately prior to the sale and have not claimed the exemption in the past 2 years.

If he does not qualify for the exclusion but owned it for at least 1 full year, the gain is taxed at the lower long-term capital gains rate.

If he owned it less than 1 full year, it's taxed as ordinary income at his marginal tax rate.

Answer 2

It might. If he lived in the house for two of the five years immediately prior to the sale, and owned it for at least two of those same five years, then no.

This assumes it was his primary residence, not a second home or rental property.

Answer 3

Yes it counts as income. But you may be able to offset some of it by claiming any repairs or improvements you did to the home while trying to sell it.

Answer 4

Nope, exempt up to $250,000 or $500,000 for a couple. You can do that every 24 months, I believe(used to be 1 time only for over 65). It must be your main residence.

http://www.bankrate.com/brm/news/real-estate/20041018a1.asp