Capital tax gains question?

Question

Capital tax gains question?
bought house 374k 11 years ago
own 950k presently, made lot of improvements.

sell it for 1,200,000.00

what is my tax liability issues or gains i can claim????

Additional Details

we have taken out couple second mortgages and equity line credit,how does that effect this??

Answer 1

Your cost basis will be the original cost plus improvements made. The net selling price minus adjusted cost basis will be the capital gain. Amounts over $500,000 , assuming two people own the home, are taxable as long term capital gains. Second mortgages and equity loans are not considerations for tax purposes. For more details see the attached IRS leaflet on selling your home.

Answer 2

Your cost, plus the cost of the improvements = your basis. Not sure what the 950k stands for that you mentioned; is that the value of the improvements?

Your sales price less your basis = your gain.

If you lived in the home as your principal residence for 2 of the 5 years immediately prior to the sale, you may be able to exclude part or all of the gain from taxes. The exclusion amount is $250,000 if you are Single or $500,000 if Married Filing Jointly. Any amount above the exclusion amount is taxed as a long-term capital gain at the lower rate, normally 15%.

Outstanding mortgage balances have no impact on the gain that you realize on the sale.

Answer 3

The debt on the house does not effect the tax on the gain.

Add your purchase price of the house and all improvements together. This is the basis of your house.

The selling price (net of sales commissions) minus the basis is your gain.

You can exclude $500,000 of gain from taxation if you are married ($250,000 if not married). Any non-excluded gain is taxed as long-term capital gains on Schedule D. The maximum tax rate for this gain is 15%.

More details are in the IRS Publication Selling Your Home.

http://www.irs.gov/publications/p523/index.html

Answer 4

they're the two going to tax capital features, as have all pres in contemporary memory. The question is to what point will they tax them. the present cost for LT capital features is 15% (i've got self assurance). some have pushed for a Cap features tax as severe as 30%, or to tax them at consumer-friendly earnings. Warren Buffet will inform you that because of fact Cap taxes are so low, he pays much less in taxes than his $50k/ 12 months Secretary(individually, i don't comprehend why somebody with that lots money is in basic terms paying his help $50k). on the different section, the base line for many seniors, pensions and retired persons, capital features is the source of their earnings, you develop that tax and your elevating taxes on them. as nicely, decrease capital features taxes will spur greater investment in organisation, and to that end a greater useful financial gadget. The final factor, which i'm an enterprise believer in (yet Obama and the left isn't), is that I own a chew of a organisation, whilst that organisation makes a earnings, i'm taxed on that earnings, as quickly as a capital earnings is disbursed, i'm taxed back, to that end from my attitude, it extremely is sparkling double taxation. in basic terms some random ideas to cconsider Che toddler!!

Answer 5

$1,200,000 - $374,000 (cost of purchase) = $826,000
$826,000 - $500,000 (tax exclusion for married couple) = $326,000
$326,000 - cost of improvements - cost of purchase fees - cost of selling fees = TAXABLE AMOUNT

If the cost of improvements, purchases fees, and selling fees exceed $326,000, then your taxable amount would be $0.

Note: the tax exclusion is based on this home being your "principal residence." You must have lived in the home at least 24 of the 60 months prior to the sale.