My house is in California and I want to move to Oregon.
2007-11-06 05:06:41 · 7 answers · asked by moodyj1 1 in Business & Finance ➔ Taxes ➔ United States
you must have lived in the home for 2 of the past 5 years and cannot realize a gain of more than $250,000 if you are single and $500,000 if you are married and you dont ever have to buy another home if you dont want so there is no time limit
2007-11-06 05:22:24 · answer #1 · answered by cookiesmom 7 · 2⤊ 0⤋
Yes you will.
I assume you will have owned and lived in the house for 2 of the 5 years before the sale. If you had not rented the house, your gain up to $250,000 ($500,000 if married) would not be taxed. Gains over those amounts are going to be taxed at capital gains rates.
However, even if you qualify for the exclusion above, if you sell your house at a gain after renting it, you will pay capital gains tax. This is because you are not allowed to exclude gain equal to the depreciation allowed or allowable during the period you rented the house.
For example, if you originally purchased the house for $275,000 and that was your basis (ignoring improvements etc.), then you are allowed $10,000 depreciation each year you rent it. If you rent the house for a year before selling it at a gain, the first $10,000 of gain is going to be taxed as long-term capital gains. The remaining gain may qualify for the exclusion.
2007-11-06 07:14:17 · answer #2 · answered by ninasgramma 7 · 0⤊ 2⤋
If at the time of the sale you still meet the qualification to exclude the gain from taxation, i.e. you lived in it for any 2 of the 5 years prior to the sale as your principal residence you'll still qualify if you rented it out for a year.
There is one caution, though, that many taxpayers are unaware of. When you sell a previously rented property you MUST recapture any depreciation allowed OR ALLOWABLE when figuring your taxable and non-taxable gain. The depreciation recaptured is taxed as a long-term capital gain to you even though the remaining gain is tax free.
So do make sure that you take the depreciation deduction for the year that you rent it out because you MUST recapture an equivalent amount even if you don't take the deduction(s) on Schedule E when you account for the rental income and expenses.
2007-11-06 11:26:41 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 1⤋
You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true.
* You meet the ownership test.
* You meet the use test.
* During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home.
Ownership and Use Tests
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test).
If you can exclude the profit, then you don't need to report the sale.
If your spouse also meets the tests, you can exclude $500,000 of gain.
2007-11-06 05:32:46 · answer #4 · answered by MukatA 6 · 1⤊ 1⤋
Not if you lived in the home for 2 of the past 5 years or meet the requirements for an exception and do not realize more than $125,000 gain (for a single person) on the sale.
2007-11-06 05:20:18 · answer #5 · answered by Anonymous · 1⤊ 2⤋
If your single, you don't have to pay capital gains tax if the sale was less than $250,000. If married then it goes up to $500,000.
2007-11-06 05:20:41 · answer #6 · answered by Anonymous · 2⤊ 0⤋
How long did you own the house before you sold it?
2007-11-06 05:10:20 · answer #7 · answered by sahel578 5 · 0⤊ 2⤋