Put the money I get back directly into another house? A friend of mine said (and she wasnt sure if this was true) that If I sold my house and didnt roll over the money I got back directly into another house, that there is a 30% penalty? Is that true? Does anyone know? Thanks.
2007-03-19 06:24:38 · 8 answers · asked by Angel Eve 6 in Business & Finance ➔ Renting & Real Estate
If you dont know, does anyone have any websites that might have this information. Thanks. I've owned the house for over 5 years.
2007-03-19 06:41:30 · update #1
The answer above mine is the correct answer, and also the best advice. The 30% is there as a tax on people who "flip" houses to make money. But as long as you have lived there x amount of years, then it has a homestead exemption from capital gains.
On a side note, given the personal struggles you have been going through with your husband and school, unless you two are splitting up I strongly advise you not to sell your house. Owning a home and building equity is the fastest way to having a high net worth early in life.
Since you have only owned it for 5 years, you have been paying mostly interest on the note. The only way you'll make any money off the sale is if the value of surrounding comparable homes has gone way up.
Good luck!
2007-03-21 02:47:20 · answer #1 · answered by ? 6 · 0⤊ 0⤋
As it's already been said, you will be hit with a Capital Gains Tax (30%) if you have not lived in the house for more than two years.
Yes you can roll the money into a different property through a 1031 exchange, if it is for investment purposes. I'm guessing that's what your friend meant.
From an Investor stand point, I would refinance the house, rent it out and use the refinance money to apply toward another home. Just my two cents. :)
2007-03-19 07:42:52 · answer #2 · answered by themligroup_com 2 · 0⤊ 0⤋
I came across this on MSN this morning. Scroll down to the section called "Sell your house"
http://articles.moneycentral.msn.com/Taxes/CutYourTaxes/8typesOfIncomeTheIRScantTouch.aspx
The rules have changed since I remembered (I thought there was a one time $125,000 capital gain you could collect, but the rules have been changed to the taxpayer's benefit... for once!). The rest is up to you.
I would not sell, however, if housing values are expected to rise. It is always good to have equity, and home equity goes a long way to increasing your net worth. Sell only if one of the two things happens: you expect property values to plummet soon, or you are in the process of a divorce (I hope the latter isn't the case). If y'all are just looking at ways of cutting expenses while you do your internship, don't use a home sale to lower your cost of living, as it will come back to bite you in the future (when you would be looking for a house again). Pops is right in that you have paid mostly to interest in your house note these past five years, and little toward principle. Keep building equity, except for the two cases I cite above.
2007-03-21 04:35:28 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I would look at moving to the free apartment and renting the house out. Then you can sell when the market improves. You aren't likely to make anything on it at this time. I believe you have 2 years to buy something else and not pay taxes on it up to a certain amount.
2016-03-29 06:17:34 · answer #4 · answered by Patricia 3 · 0⤊ 0⤋
As a few other poeple have said, the first answer is incorrect. If it is your primary residence, and you have owned it for over two (2) years, if you decide to take the profit from the house, you can without any tax ramifications. Best of Luck. If you search under capital gain tax, you can double check it.
2007-03-19 07:16:42 · answer #5 · answered by bpl 5 · 0⤊ 0⤋
It depends on how long you have owned the house. If over 2 years then yes you will be hit with a capital gains tax. --but I think you have up to 2 years to do buy again. If that is not possible then place any gains in a mutual fund and at least let it earn for you so the hit will not be so harsh.
2007-03-19 06:32:22 · answer #6 · answered by golferwhoworks 7 · 0⤊ 1⤋
I believe the first guy is inaccurate... If you've owned the house LESS than 2 years, you have to pay capital gains. If you've owned it longer than 2 years, there is no penalty.
2007-03-19 06:59:50 · answer #7 · answered by ? 5 · 1⤊ 0⤋
nah, no 30% penalty. if humongous capital gains on sale, might be some tax, but their is large exemption 500k for married couples so you probably safe
2007-03-19 07:03:33 · answer #8 · answered by jim06744 5 · 0⤊ 0⤋