I have taken a job that is about 500 miles from my house, therefore will be selling it this summer. I bought the property about seven and a half years ago and have lived in it the entire time minus the last two weeks since I’ve been on the job. The property has appreciated about 200k since then. There have been no other properties bought or sold by me in this time. Now my question is two fold:
Do I basically classify for an exemption since I am well over 50 miles from my last job and home and if so, should that pretty much negate the capital gains that I will see from the sale? And:
I wasn’t going to buy a house immediately, because I wanted to see which area of town I’ll live in. Depending on what I’m looking at capital gains wise, I may change that idea. Is there a benefit to purchasing a house in this calendar year, in order to insure that Uncle Sam doesn’t grab all of my hard earned gains over the last seven years?
2007-05-18 12:05:59 · 4 answers · asked by Deep Thought 5 in Business & Finance ➔ Taxes ➔ United States
You have two unrelated issues here; the distance from your house to your new job is irrelevant for computing your capital gain. If you both owned the house and lived in it for at least two out of the last five years, and you also did not exclude the gain from a different residence in that same time frame, then you qualify to exclude up to $250,000 of capital gain on the sale ($500,000 if you're married). Unless your gain is more than that, you not only do not have to pay any tax on it, the IRS does not even require you to report it; see IRS Pub 523 below for details.
Regarding your move: because your move is closely related to your job, you are moving (I assume) within 1 year of taking the job, and the move is more than 50 miles, then you should qualify for a deduction for moving expenses. Check out IRS Put 521 below for details on that. Good luck! :-)
2007-05-18 12:09:38 · answer #1 · answered by Anonymous · 3⤊ 0⤋
It doesn't matter that you moved for job reasons, and also doesn't matter if you buy another house soon or ever.
The rules changed a few years back on taxation of gains from the sale of a primary residence. Since you owned the house for at least two of the five years immediately prior to the sale, and lived in it as your primary residence for at least two of those same five years, you can exempt $250K of gain ($500K on a joint return) from being taxed. So you should be in good shape. Good luck on finding a buyer quickly.
2007-05-18 23:43:59 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
This one is a no brainer. If you resided in the house for the last two years (short absenses are normal and don't subtract from the time period) and are single you can sell it and make a two hundred and fifty thousand profit and owe no tax since it was your main home. If you are married and filing jointly you can make a five hundred thousand dollar profit and own no tax. Get a pub 15 or go to IRS.GOV and check this out if you wish. I have done taxes for 36 years so this is why I called it a no brainer.
2007-05-18 19:10:42 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
According to the Taxpayer Relief Act of 1997 you qualify for a primary residence exclusion. If you live and own your primary residence for two of the past five years, you qualify for the exclusion amount of $250,000 for a single person, $500,000 for a married couple filing jointly.
The exclusion is available every two years and you can do whatever you want to do with the money.
2007-05-18 19:12:57 · answer #4 · answered by William H 5 · 0⤊ 0⤋