How does capital gains tax work on home sales? What is the percent in WA state?

Question

I guess what I really need to know other than the percent in WA state is...Do you pay capital gains on the full selling price or only on any profit you make or???
I bought a little rental house, which I should not have done, because I do not understand the financial ins and outs. Now I would be happy to sell and just get my original investment back...Any help will be deeply appreciated. Thank you

Answer 1

The gain or loss is calculated on the selling price less the basis less sales expenses.

Basis is the original cost plus improvements less depreciation that was claimed (or should have been claimed).

This is a rather complex transaction that should be left to a professional to calculate. You may have a gain or loss once you crunch all the numbers. If you have gain, you are only taxed on the net gain; not the gross.

Answer 2

Neither of your ideas to stay remote from tax will artwork. the belief of giving part of the living house to a relative, and then having him pay off you the income, is a step transaction. A step transaction is countless of prearranged transactions that have little or no financial substance distinctive than tax avoidance. people think of of up each and every variety of step transactions. The IRS has the authority to definitely neglect approximately approximately step transactions. subsequently, you may nonetheless be taxed on the total income. shifting the living house to an LLC does not shrink any tax due, and watching the LLC entity election, ought to even strengthen the tax. On yet yet another concern, while you're trying this in many circumstances the properties does not be eligible for capital constructive factors scientific care. you would be contained interior the style company, and the properties must be seen inventory.

Answer 3

Washington state doesn't have an income tax so you would be fine there...You will pay various state and local sales and transfer taxes though when you sell.

Also, there is an expemption at the federal level as long as you have not sold for more --- $250,000 if single or $500,000--than you purchased the home for... Other things like, say, basis come into play also.