When you sell your primary place of residence (lived there 10 years), do you have to include the money you made on the sale after property taxes are paid and the mortgage on your income taxes? Is it considered an income?
2007-04-27 08:30:14 · 12 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
When you sell, you have a capital gain, and all capital gains are considered income.
For selling your primary residence, Congress has awarded an exclusion of the first $250,000 of that gain (double if you're married filing joint).
One of the answers above gave a good link. For exclusions, go to page 9.
(If you're active-duty military, these exclusion rules don't apply. The Military Family Tax Relief Act of 2003 awarded military families the $250k/$500k under any circumstances, even if you only lived in the home for a month.)
2007-04-27 08:35:08 · answer #1 · answered by Anonymous · 3⤊ 0⤋
Judy's answer is the best so far. To clarify a few points:
1. The mortgage has no effect on taxes (except for the interest deduction).
2. Property taxes are not considered in calculating your gain.
3. Buying a new house no longer has any effect (as Judy said).
4. Your gain is the difference between sale proceeds and your basis (usually what you paid for the house).
5. The first $250,000 ($500,000 if married filing jointly) of gain is excluded from taxes.
6. You have to REPORT the sale even if it is not taxable.
2007-04-27 14:20:20 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
You're in luck - the rules changed a few years back. If you owned the house for at least two of the five imediately prior to the sale, and lived in it as your main home for two of those same five years, then you can exclude up to $250 of gain ($500k on a joint return) from being taxed.
To figure gain, you look at your original cost, plus improvements over the years (no, not property taxes or mortgage payments) and compare it to what you got on the sale. There are some other things you might also be able to take when figuring your gain. If the gain is under the limits above, you don't have to report it or pay any tax.
The rules on having to be 65 or else reinvest the proceeds in another home are gone also.
2007-04-27 11:02:42 · answer #3 · answered by Judy 7 · 2⤊ 0⤋
You will pay capital gains tax on the sale. To exclude the gain on the sale of a personal residence you must have owned and lived in the home for 2 of the 5 years immediately prior to the sale. If you meet that test (and have not used the exclusion within 2 years of the date of the sale) you can exclude up to $250,000 in gain if Single or $500,000 in gain if married filing jointly. If you owned it for more than 1 year as of the date of sale, the gain is taxed at the long term capital gain rate which is normally 15%. However if your marginal tax rate (inclusive of the gain) is 15% or less, the rate for tax years 2008 and 2009 is 0%. If you owned it for one year or less, any gain is taxed as ordinary income at your marginal rate. There are no special treatments due to your age. There used to be, but that law was tossed over a decade ago in favor of the current (and much more favorable) exclusion.
2016-05-20 16:47:05 · answer #4 · answered by ? 3 · 1⤊ 0⤋
The first 250,000(500,000) is tax free. If you go over this and buy a new house with the proceeds then you can reduce the extra gain off of the basis of the new house.
If you don't go over the 250/500,000 then you don't even have to report the gain more or less pay any taxes on it.
2007-04-27 10:48:54 · answer #5 · answered by darrenwelsh429 2 · 0⤊ 2⤋
If your profit is less than $250,000 ($500,000 if married), then no, you don't have to report it and it is not taxable. If it was more, then you have to report the sale and pay tax on the gain.
2007-04-27 08:38:56 · answer #6 · answered by Amy F 3 · 1⤊ 1⤋
as long as the profit is less than like $250,000 for an individual and like $500,000 for married couple...NOPE!
2007-04-27 08:35:37 · answer #7 · answered by StephanieS 2 · 1⤊ 0⤋
Sales of private residence are tax free, assuming the sale of the residence is less than 500k.
250k if filing single. (IRC §121 ).
pas those amounts, its a15% capital gains rate.
2007-04-27 08:35:51 · answer #8 · answered by jeffpa 2 · 0⤊ 5⤋
Yes. It may workout ok - but you do have to claim it. Remember this it "will" be reported to the IRS and if you don't claim it that will be a big red flag.
Best of luck.
2007-04-27 08:39:02 · answer #9 · answered by Silly Girl 5 · 0⤊ 4⤋
In the USA, if you buy a new home, then no.
If you do not buy a new home, then yes. However, at a certain age you can take a ONE-TIME capital gain on the sale of your home. This is for senior citizens who sell their homes when they no longer want that big family house any more.
2007-04-27 08:33:54 · answer #10 · answered by kja63 7 · 0⤊ 8⤋