The equity is from the gain from past homes. I need the money to pay off debt and will not be buying another home. If the money is taken out as a second mortgage but repayed late this summer when I decide to sell the home and move into another home we own, will it be subject to capital gains tax?
2007-02-15 06:14:34 · 5 answers · asked by Kat 2 in Business & Finance ➔ Taxes ➔ United States
Loan proceeds are not taxable. The actual gain on the sale of your home might or might not be. If you have lived in the home as your main home for two of the five years immediately before the sale, and owned it for two of the same five years, then the first $250K ($500K if married filing a joint return) isn't taxed. There is no longer a requirement to buy another home or to be of a certain age to not have to pay capital gains tax on the sale of a home.
2007-02-15 16:37:03 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
As long as you have lived in the house as your principal residence for at least 2 of the previous 5 years, counting back from the date of sale, you can exempt the first $250,000 ($500,000 if filing married filing jointly) of gain from tax. Taking out a home equity loan will have no bearing on whether or not you have taxable gains on the sale of the home, as your basis in the home is what you paid for the home, not how much your mortgage is on the home.
2007-02-15 06:28:32 · answer #2 · answered by jseah114 6 · 0⤊ 0⤋
The loan has no affect on your taxes, aside from the deductibility of the interest paid.
The loan payoff does not factor into the gain or loss on the sale of the property. Only the cost basis and the sales proceeds factor into the gain.
Whether or not you will have to pay captial gains taxes on the gain on sale will depend upon whether this is your principal residence or not, and whether you have lived in it for 2 of the 5 years prior to the sale or not.
2007-02-15 06:31:02 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
when you're married filing a joint go back, and meet the criteria to exclude benefit on the sale, then you quite gained't pay cap useful aspects tax. once you're unmarried and meet the criteria, you need to exclude $250K of the benefit yet would nonetheless in all probability owe some tax on the sale. In both case, you need to do regardless of you want to with the proceeds - that would not substitute what you do or do not pay tax on. you do not ought to purchase yet another domicile - that rule went out years in the past.
2016-12-04 05:24:44 · answer #4 · answered by ? 4 · 0⤊ 0⤋
indeed it's a good question, i can recommend you, when money is involved to check it very well before you do something,
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2007-02-18 03:08:05 · answer #5 · answered by zupa t 1 · 0⤊ 0⤋