How much tax do I pay on the profits of buying and selling a house in 3 months?

Question

If I bought a home for $150,000 and then within 3 months sold it for $190,000, how much tax do I pay on the $45,000 profit?

Not a primary residence

Answer 1

It's $40,000 profit, not $45,000 profit, and you pay ordinary income tax on it; so it's based on whatever income tax bracket you're in. I believe you're able to deduct from the profit any upgrades you did or sales commissions you paid.

Answer 2

Was this home your principal residence? Did you sell it to take another job? If so, you can exclude a pro-rated amount of the $250,000 exclusion on the sale of a principal residence. The exclusion would be about 3/24 * (250,000) or $31,250. There are several other circumstances under which the pro-rated exclusion applies (such as serious medical problems, divorce, etc).

See IRS Pub 523 for details.

http://www.irs.gov/publications/p523/index.html

To the extent you cannot exclude gain, figure your gain on Schedule D. Add to the purchase price the costs of the purchase, such as title search, recording fees, etc. Subtract from the sales price the costs of selling the house, such as sales commissions. These adjustments will minimize your gain. Commission on a sale of $190,000 may be as high as $15,000, so you should be able to whittle down your gain quite a bit.

Any gain figured on Schedule D will be taxed as ordinary income, since it is short-term.

Answer 3

Give you math skills I hope that you seek the assistance of a tax professional. You may have adjustments to the basis which would reduce the tax liability further that a math check. When you do arrive at the proper gain, that amount will be added to your ordinary income. There is no way to determine the tax without knowing your other tax information.

Answer 4

You will pay on the $ 45k however if you replace with a like kind property equal or greater value then there is no tax due or if you spend under now but during your ownership you make capital improvements later this will offset your tax if you sell again.

Questions answered are if you are from the US.

Answer 5

Go with ninasgramma. You may be able to not recognize any gain but with the limited information given, it is hard to say.

Answer 6

It's short term capital gains . . .whatever your income tax bracket is.

Answer 7

It is short so it is taxed at your normal rate.