Capital gain tax for house selling?

Question

I just sold my house and recieved $363000 check.
I am a single and paid $70000 down payment so my taxable amount is $43000. How much do I have to pay tax for this gain?

Is there any way to save on tax? I am self-employed and run a small cmopany so my salary is low. Can I use mortgage interest amount paid when I was paying my mortgage for my previous house?
I am a renter now and I won't be buying any house for a while.

Answer 1

You are also allowed to deduct the cost of any major improvements to the house while you lived in it. If you paid to have it painted, replaced fences, fixed up a bathroom, hung drapes and shades that stayed with the house, etc. Just make sure that you have receipts. Mortgage interest for the year is deductible in that year so you can only deduct the interest you paid from January to July.

Talk to a tax accountant to get the proper advice.

Good luck & congratulations on you great profit.

Answer 2

No, you can't use mortgage interest on a previous house. If you made any improvements, though, to the house you sold, you could subtract those from the $43K. I assume that any selling expenses were already out of the check you received.

If your tax bracket is 15% or lower, the capital gains tax on your house, assumint that you owned it for at least a year and a day, would be 5%, or $2150. If your tax bracket is higher than 15%, which from your question it probably isn't, your tax would be 15% or $6450. Still leaves a lot from those proceeds.

Answer 3

If you owned and lived in the home 2 out of the last 5 years (they do not have to be the same 2 years), you do not have to claim any earnings under $250,000 if you are single (which you are) or $500,000 if you are married. If you did not fulfill the owning/living rule, the amount to pay taxes on can be prorated.

You can use the mortgage interest for the home you sold on your 2007 tax return, on a Schedule A, just as you did last year. Any improvements you made to your home are NOT deductible on your tax return. The only thing you can use these costs for is to add to your basis in the home for calculating the amount earned at the time of sale. (Say you bought the house for $100000, and sold it for $400000. Oops, you went over the $250000 limit. But not to dispair! The cost of the new roof, paint, siding, kitchen, furnace, land improvements, etc gets added to the the $100000, so now your basis is $180000. You made it under $250000!)

Check with the state you live in to see if your rent is deductible. It is not deductible on a federal return.

Answer 4

If you owned and lived in the house for 2 out of the last 5 years you can exempt capital gains up to $250,000 if single, and $500,000 if married. If you didn't live in it for 2 out of 5 years, but lived in it for at least 1 year, it would be long-term gain, and would be taxed at rate of 15% (5% for those in 10 or 15% bracket). If less than 1 year it's short-term gain, and is taxed at your normal tax bracket rate.

Answer 5

There is no capital gains on properties you sell in which you owned for 2 years, UNLESS you made a profit of more than $255,000 I believe. Now if the tax laws have changed to lower or raise that limit, I am not sure. You can save on being taxed if you do what is called a 1031 exchange, but that involves rolling the profit into another property, delaying the taxes till later.

Answer 6

If you are in the states, and you lived in your house as a primary residence for 2 years or more, there is no capital gains tax on selling.

Hopefully, you enjoy the savings!

Answer 7

you CAN claim the mortgage interest you paid in 2007, before you sold the house, on your 2007 tax return (filing next year).