I am selling a condo for $200,000 on the east coast. I purchased it 3 years ago for $85,000. I lived in it the last three years. I plan to sell it and move to the Mid west where I plan to buy a house for between $110,000-$150,000.
How does the capital gain tax work? Will I have to pay taxes on $115,000 for the difference between buying and selling price on condo? or will i only be taxed on the difference bewteen selling price of condo and buying price on house in the Mid west?
Please help.
2007-04-25 13:37:51 · 6 answers · asked by donotbuyepsonproducts 2 in Business & Finance ➔ Taxes ➔ United States
Most real estate sold for a profit is subject to capital gains tax, but there is an exception in the case you describe. If the real estate has been your principal residence for at least 2 of the 5 years previous to your sale, you have an exemption for up to $250,000 of gain - no tax. For a married couple, it is up to $500,000 of profit that is exempt. I am not a CPA; I am a Chartered Financial Consultant for 20 years. You should verify at IRS.GOV or call maybe 2 or 3 tax preparers like H & R Block just to give yourself peace of mind about this. Or call the irs hotline.
2007-04-25 13:51:34 · answer #1 · answered by Anonymous · 2⤊ 0⤋
As a single person you are allowed to profit $250,000 from the sale of a primary residence in which you've lived in for at least 2 of the last 5 years without being taxed. The cost of your next house is irrelevant for this particular question. If you are married filing jointly that 250K becomes 500K. There are a few other terms that i'm guessing you don't qualify for such as not owning 3 or more houses. Consulting a professional in your state is always a great idea as well.
2007-04-25 13:42:35 · answer #2 · answered by CSUflyer 3 · 2⤊ 0⤋
yes and no, I would say that the ordinary working folks of this country today pay a lot more of their income in the form of the myriad taxes you have so aptly displayed. However, if you are a high income earner today, like for example, someone who earns more than 1 million dollars a year, you actually pay less of that income in taxes than you would have say around 1975, or 1968, or 1962, or 1957, or 1949, or 1939, or 1935, or 1932...etc...... At the federal level at least there is a lot of wasted tax revenue that is used for the wrong things that serve as a detriment to our society than as a benefit. At the local level, there seems to never be enough money of late for all the services local govts are expected to provide....partly due to the federal waste...and lower taxes on the wealthy and large corporate entities.
2016-04-01 07:30:22 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You should be exempt from having to pay capital gain taxes since you lived in the house for more than 2 years.
2007-04-25 14:44:06 · answer #4 · answered by guru 2 · 0⤊ 0⤋
In your case, you will pay no tax at all. As a single person you can exclude up to $250,000 in gain (or $500,000 if you're Married Filing Jointly) from the sale of your principal residence if you lived in it for at least 2 of the 5 years immediately prior to the sale. From what you say, you qualify for the exclusion. You could buy bubble gum with it and you wouldn't pay a dime in tax on the gain.
2007-04-25 14:29:40 · answer #5 · answered by Bostonian In MO 7 · 2⤊ 1⤋
Neither. If you lived in it as your main home for two of the five years immediately before the sale, and owned it for at least two of those same five years, up to $250K (%500K on a joint return) of gain is excluded from taxes. The rule about investing profit in another house is no longer in effect.
2007-04-25 14:27:01 · answer #6 · answered by Judy 7 · 3⤊ 0⤋