I purchased it for 350.000 and they are going for around 650.000 to 750.000 I have redone all flooring and inside paint and also new backyard fencing and landscaping. Does any of this help me with capital gain. and how do I figure what amout I would owe on? I want to just rent from now on, but I was told I have to buy something else to save me from the capital gain...is this true?
2007-04-25 15:51:44 · 4 answers · asked by JK 3 in Business & Finance ➔ Taxes ➔ Other - Taxes
You do NOT have to buy anything to avoid capital gains taxes on your home. That rule was thrown out over 10 years ago; your source has been living in a small box out on the back 40 for quite a while. (It appears that at least one of the above posters was in that box as well.)
Improvements (but not repairs) will increase your basis and reduce your gain. The gain on the sale of your principal residence is exempt from tax, up to $250,000 if your filing status is Single or $500,000 of your filing status is Married Filing Jointly, if you lived in the home for at least 2 of the 5 years immediately prior to the sale.
If your gain is more than the above amounts, the excesst will be taxed as a long term capital gain. That is taxed at a lower rate, normally 15% for most taxpayers. So, if you're filing status is Single and your gain is $300,000, you'll have a taxable gain of $50,000 and will owe about $7,500 in tax on the excess gain. Not a bad deal when you think about it!
2007-04-25 16:19:29 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 1⤋
Bostonianimo gave you the only good info so far. And not only do you not HAVE to buy another house to avoid capital gains taxes, buying another house won't help you avoid them either.
2007-04-25 17:08:55 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
You have so much time to invest that money and that depends on is this your only house. What age are you will get favor too. You have a year to do something with the money or pay taxes. Age matters too. You can call IRS 1800-829-1040. Set up an appointment for free advice--Cesar world; Uncle Sam wants to assist.
2007-04-25 16:04:46 · answer #3 · answered by Anonymous · 0⤊ 4⤋
With that kind of money involved talk to your tax person. But I do think that if you reinvest the money into a new home within a year then your ok but like I said ask you tax person...
2007-04-25 16:05:24 · answer #4 · answered by Johnny 5 · 0⤊ 3⤋