I didn't need another house. Will I have to pay taxes and when?
2007-03-26 08:23:25 · 12 answers · asked by crackrjack 1 in Business & Finance ➔ Personal Finance
The law used to limit you to a one-time exemption, but the law has since changed. Whenever you live in a property for at least 2 out of the last five years, as an individual you can realize up to $250,000 in capital gains without paying any taxes - a married couple gets a $500,000 exemption. You can do this as many times as you like.
Only if your gain exceeds these amounts will it be subject to capital gains taxes. If it doesn't, then yes - you could just put the amount in savings or wherever else you want. Check out the IRS publication referenced below.
2007-03-26 08:51:21 · answer #1 · answered by Marko 6 · 1⤊ 0⤋
Pretty simple / standard IRS rule:
If you have the asset for less than 1 year then any gains are taxed at your marginal individual rate - since it's classified as a "short-term capital asset", probably 28% for you. If you hold the asset longer than 1 year then it becomes a "long-term capital asset". Tax rates depend on the asset class. Stocks / Bonds are generally 20%. I think real estate is 15%.
However, there is a special rule for real estate that is a primary residence: If you have lived in the the asset for 2 of the past 5 years then you are exempt from all federal tax when you sell it.
That's why a lot of people will live somewhere 2 years, then rent it out for 3 more years. As long as the renter covers the payment for cashflow purposes, the landlord gets three extra years of appreciation and you can still sell it tax free.
2007-03-26 15:31:45 · answer #2 · answered by ropman1 4 · 2⤊ 0⤋
You are allowed to take a one time tax free gain on the sale of a home in your lifetime, up to $400,000. So yes you may put the money into savings and not pay tax.
However, if you later buy a house a gain, you will not be able to repeat this gain, and will owe taxes on the sale
2007-03-26 15:28:49 · answer #3 · answered by Anonymous · 1⤊ 0⤋
If you sold your house last year you MAY owe taxes which would be payable in April. Check with a tax advisor because the gain or loss depends on your particular situation.
2007-03-26 15:27:13 · answer #4 · answered by tomnmexico 4 · 1⤊ 0⤋
Assuming that you lived in it at least 2 years in the last 5, you don't owe taxes (unless your profit is more than $250,000/$500,000 if married). You can just put it in your account and spent or invest it.
There is some IRS form that you do need to fill out.
2007-03-26 21:28:23 · answer #5 · answered by Quixotic 3 · 0⤊ 0⤋
You can do whatever you want with the money! And the best part is that if you are single, you don't have to pay capital gains tax unless the profit is more than $250,000 (if you're married you can make up to $500,000 profit before you have to pay taxes).
2007-03-26 15:26:57 · answer #6 · answered by lizzgeorge 4 · 1⤊ 1⤋
NO When you buy you pay taxes. When you sell you dont pay extra taxes, the money is yours to put in the bank or whatever.
2007-03-26 15:29:42 · answer #7 · answered by Anonymous · 0⤊ 1⤋
You probably won't have to pay taxes on it, unless you made a lot of money. I looked this up recently so I know
2007-03-26 15:26:57 · answer #8 · answered by Anonymous · 0⤊ 1⤋
I would consult a tax professional.
Also, you're not just gonna put it in a Savings account are you? At least put it in a money market fund.
2007-03-26 15:26:51 · answer #9 · answered by Anonymous · 1⤊ 1⤋
yes you will have to pay taxes on it. the only way around it is to purchase another house of same of more value.
2007-03-26 15:26:50 · answer #10 · answered by milton b 4 · 1⤊ 2⤋