My sister sold her house and she is moving to a new one. Does she have to pay taxes on that money?.
2007-10-31 05:44:56 · 10 answers · asked by 747pilot 3 in Business & Finance ➔ Taxes ➔ United States
Feanor has given the only correct answer. Give him or her the points!
There are a few other limitations, however. If married, you MUST file a joint return. Also, you may only claim the exclusion once every two years. Lastly, there are some exceptions to the "2 of 5" rule that will allow for a partial exemption if you have to sell due to illness, job move, or disability.
Several folks have mistakenly referred to the old Rollover Replacement Rule which was tossed a decade ago in favor of the current exclusion. At least one person has the current law confused with the old one-time exclusion if you were over a certain age. That was also tossed a decade ago.
And to the clown who thinks that this will be lost if Hillary wins, consider this: Her hubby was president when the current exclusion was enacted. That's right, a MAJOR tax break for the average citizen, compliments of the Democratic party. The exclusion of the gain from tax on the sale of a personal residence is the single most significant tax law change in 50 years. It was intended to give the middle class a break and has worked swimmingly well.
2007-10-31 06:07:48 · answer #1 · answered by Bostonian In MO 7 · 3⤊ 1⤋
Maybe. If she owned it and lived in it as her main home for two of the five years immediately before the sale, she would only pay tax on any part of the gain that was over $250,000, or $500,000 if she's filing a joint return. If she meets those rules and her gain is under the limit, then she wouldn't pay any tax on the sale.
Geez, what a mess of wrong answers you've gotten.
2007-10-31 13:17:35 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
If you use the house as a business meaning you've leased or rented it out or you sell houses as a business and report your income from this to the IRS then you have to pay withholding taxes. If you never used it for business you have to pay Capital Gains Tax which is usually 5% of the actual selling price and documentary stamps (you can make a deal with the buyer so they'd shoulder this one) which is around 1 to 2 percent of the selling price.
2007-10-31 12:58:35 · answer #3 · answered by reg 5 · 0⤊ 2⤋
There's a $250k ($500k if married) exemption if you have lived in the house two out of the last five years before the sale.
BTW, that's gain not the price. You'll still owe the state.
Any gain above the exepmtion is taxed as capital gains or all of the gain if the requirements above are not satisfied.
2007-10-31 12:48:53 · answer #4 · answered by feanor 7 · 5⤊ 0⤋
Everyone is allowed to sell one house without paying taxes. There may be a limit to the amount though and you should check with the IRS on that.
2007-10-31 12:54:36 · answer #5 · answered by Brad H 3 · 0⤊ 3⤋
It depends on your age. If you sell a house and reinvest the money in a new one there is no tax. If you sell and keep the money to rent there is a capital gains tax , but again it depends on your age.
2007-10-31 12:50:14 · answer #6 · answered by Hirise bill 5 · 0⤊ 6⤋
not if she puts her money into a more expensive one....then that depends on the capital gains.
2007-10-31 12:48:47 · answer #7 · answered by Anonymous · 0⤊ 5⤋
If Hillary wins you can bet whatever Tax may be it will be RAISED !!
2007-10-31 12:48:36 · answer #8 · answered by Anonymous · 1⤊ 5⤋
only after all the expeneses deducted and if you don't reinvest it in another house...
2007-10-31 12:47:36 · answer #9 · answered by ss 2 · 0⤊ 5⤋
Yes. Her attorney *should* handle everything for her.
2007-10-31 12:47:52 · answer #10 · answered by C>/ 4 · 0⤊ 5⤋