Tax Advice for Selling my House.....?

Question

If I bought my house for $275,000 in 1980 and sold it today for $700,000.......what kind of taxes do I pay?........I believe I get a $500,000 tax shelter, but I'm asking this question because I don't know.

Answer 1

If you are married and have lived in your primary residence for more than 2 years, you have up to $500k that can go untaxed if you sell your primary residence. It is $250k if you are single and have lived at your primary residence 2 years or more.

Answer 2

If the house was your principal residence for at least 2 of the last 5 years, then-

A single person qualifies for a $250,000 gain exclusion; a married couple qualify for a $500,000 gain exclusion. You indicated that you have a gain of $425,000. If you are a married couple, you will not have to pay any tax on the gain. If you are single, you will have to pay tax on a portion of the gain. The actual gain may be less than you indicated. The adjusted cost of your house is the purchase price plus any capital improvements that you made to the house. Your selling price is the amount you get after selling costs (not the agreed to selling price) and even this can be reduced by certain other selling costs. If you are single, I suspect you will have to pay taxes on a gain of $130,000 or more (depending on the factors I mentioned previously).

Answer 3

If you lived in the house for at least 2 of the 5 years prior to the sale you are eligible to exclude all or part of the gain from tax. The amount of the exclusion depends upon your filing status. If your status is Single, you can exclude up to $250,000 in gain. If you are Married Filing Jointly you can exclude up to $500,000. You must not have claimed the exclusion within 2 years of the sale date of the home to claim it this year.

Using the numbers you gave, your gain is $425,000. If you are single you have a taxable long term gain of $175,000 after applying the $250,000 exclusion and will owe $26,250 in tax unless your tax bracket is 15% or lower. In that case, you'd owe $8,750. If you are married and file a joint return the entire gain is tax free and you owe no tax.

Please ignore the first response. The old rollover replacement rule was tossed a decade ago in favor of the current exclusion.

Answer 4

You get the stepped up basis if you receive the home through bequest. If that basis is $700k and you sell for that amount there is no gain and no tax. If you sell for more than that you may have a tax liability. To avoid the tax you will have to move into the home as your principal residence for at least 2 years before you sell. If you don't live in the home then any gain is fully taxable as a long-term capital gain regardless of how long you own it. The rate is 15% for most taxpayers. If your marginal tax rate is 15% or less, the rate is 5%. If your father were to pre-decease your mother, she'd receive a blended basis of one-half of the stepped up basis from your father ($350,000) plus one half of her own original basis ($137,500) for an adjusted basis of $487,500. If she were to sell for $700,000, her gain would be $212,500 and no tax would be due.

Answer 5

If you meet all the requirements, and you probably do if this has been your main home, you can exclude $500,000 of gain on a joint return, $250,000 for any other filing status.

Answer 6

I believe current tax laws allow you to shelter $550,000 of the gain. So in your case, you are fine. But double-check at www.irs.gov.

Answer 7

If you buy another house, you get to roll over the gain in what is considered a real estate exchange.

Answer 8

It depends on your marriage status and what you do with the money. If you are married things are peachy.