My understanding is if you sell your house for more than you paid and put into it, the remaining amount gets taxed as income if you don't roll it into a new mortgage in less than 18 months. Is that accurate? If I'm moving but may not be able to buy a new house for more than 18 months, is there any way to avoid paying taxes on those funds? I will have about $100,000 appreciation after deducting original purchase price and invested funds. I am in Idaho if that matters. Any thoughts are appreciated. Thanks!
2007-07-20 13:15:50 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
IRS! There's a tax-evader!!
Just kidding!
I recommend:
1) If the house is your primary residence and you have been living there for over 2 years out of the last 5 years, you will automatically get an exemption from capital gains tax in the amount of $250k ($500k if married filing jointly and both lived in the house for 2 of 5 years).
2) If this was an income property, then you can do a 1031 like-kind exchange within 180 days to avoid capital appreciation tax.
3) If you are 55 and older, there may be a once-in-a-lifetime exemption of $125k from an older law.
Read the bankrate article cited in the source. It is pretty clear.
Good luck!
Just Be!
2007-07-20 13:30:19 · answer #1 · answered by MBA Don 4 · 2⤊ 0⤋
If you sell a personal residence, in which you have lived for at least 2 of the last 5 years, there is a tax exemption of $250,000 or $500,000, but there is no equivalent for income property, in which appreciation (if any) is taxed as a capital gain.
2007-07-20 13:27:04 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If it is your principal residence,and have lived there for at least 2 years, the gain is TAX FREE, up to $250k for one person or $500k for a married couple.
The regulation that you c.ite has not been around fo 15 years or more, if ever
If you have lived in your primary residence for less than 2 years, you must pay taxes on the gian.
Be happy that you have a profit !! I love Idaho.
2007-07-20 13:23:31 · answer #3 · answered by CommonCents 4 · 0⤊ 0⤋
The rule about deferring tax by rolling the gain into a new house purchase went out a number of years ago.
Under the current rules, if you owned the house for at least two of the five years immediately before the sale, and lived in it as your main home for two of those same five years, then up to $250K of gain ($500K on a joint return) is not taxed. So as long as you met the two years, you'll be fine and won't owe federal taxes.
Most states follow the same rules, but not all - I'm not sure about Idaho.
2007-07-20 13:23:39 · answer #4 · answered by Judy 7 · 0⤊ 2⤋
There is a one life time amount you can protect from taxes from the sale of a home. ~
2007-07-20 13:23:47 · answer #5 · answered by Anonymous · 1⤊ 4⤋