2007-09-24 10:50:48 · 6 answers · asked by Derek w 2 in Business & Finance ➔ Taxes ➔ United States
The federal rules are that you may exclude $250,000 ($500,000 if you file as "married filing jointly") from taxation if the home was your primary residence for two of the last five years. If you did not live there for two years (they don't have to be consecutive, for example if you bought the house on Feb. 15, 2003 and moved in right away, but moved out Feb 15, 2005 only to move back May 1, 2006 and sold the house May 15, 2007, you will meet the two-year rule), you may prorate the $250K exclusion based on time as long as the reason you moved is because of a new job too far away, or an unforseen circumstance.
Most states follow the federal rules but some do not.
2007-09-24 13:46:58 · answer #1 · answered by garyg7 7 · 2⤊ 0⤋
You should qualify for the exclusion if you owned and lived in the home as your primary residence for 2 out of the last 5 years and you have not previously sold a home and excluded the gain in the past 5 years.
2007-09-27 13:24:58 · answer #2 · answered by J L 2 · 0⤊ 0⤋
Char 1 is totally wrong in her answer, and Wayne Z as usual is correct. Sursumcordo as a little bit of his answer correct, but mostly wrong – being a first home sale has nothing to do with it, and the rules about reinvesting in another home to defer the tax have been gone for years, that no longer makes any difference. Wayne Z is right on, though.
2007-09-24 18:11:00 · answer #3 · answered by Judy 7 · 4⤊ 1⤋
The above answer is wrong.
If you owned and lived in your house for 2 of the 5 years before you sold it, the first $250,000 (if single) or first $500,000 (if married) in profit is tax free.
If you lived in it under two years but had to sell due to work or some other "unexpected circumstance", the above exclusions are prorated.
If you lived in it under two but just sold to get a different house, the profit is taxable.
2007-09-24 18:00:51 · answer #4 · answered by Wayne Z 7 · 7⤊ 1⤋
No, you can keep the profit if this is your first home sale and you lived there 2 out of the last 5 years. Or you can reinvest it in another home of equal or higher value and then take the tax free profit when you sell that one. If you're young, go the reinvestment route.
2007-09-24 18:02:30 · answer #5 · answered by sursumcorda 6 · 0⤊ 6⤋
As long as you re-invest the money in something like a mutual fund, 401K or other real estate, within 30 days from the sale of your home, you don't have to pay any federal taxes. State taxes will depend on where you live.
P.S.- If you guys think I'm so wrong... Check the current IRS rules about "CAPITAL GAINS"!!!
2007-09-24 17:57:39 · answer #6 · answered by Char 1 3 · 0⤊ 8⤋