"Capital Gains" Tax on selling a house that you owned for less than 2 years?

Question

How does it work? Do you just add the profit to your income for the year? Are there any loop holes?

Oh, it only counts if you make more than 200K???

I'm in the clear then by a long shot.

Answer 1

Eh (Ω)Jack

You missed the 250k exclusion because you haven't lived in the house for 2-years?

Most likely yes, you will have to pay capital gains, but there are exceptions, such as your previous house was condemned, or you inherited the house. There are also partial exceptions for health, employment, and certain unexpected events. You should carefully read IRS publication 523: http://www.irs.gov/publications/p523/index.html .

If you have to pay, you pay capital gains tax, it is often at a lower rate than personal income tax. You pay it on the tax return for the year of sale and you report it on your income tax return.

You pay tax on your net gain (What you recieve - what you paid and other deductions). You also get to (i) deduct improvement, but not repairs, (ii) brokers commissions, (iii) real estate transfer tax and costs. After these deductions, you might not much tax to pay. Note: There was bad advice above, there is NO exclusion for income less than 200k, you also don't get to deduct notes on the property.

If the house is a rental, you might be able to do a like-kind exchange.

>>>>>>>>>>>>>>>>

Sorry, it applies to everyone, not just those earning over 200k

Answer 2

I assume you owned and lived in the the house for more than one year.

The worst case is that you will owe long-term capital gains on the gain realized when you sell the house. For 2007, the maximum long-term capital gains tax rate is 15%.

However, if you sold the house because of a change in employment or certain other circumstances, you may be able to exclude a part of the gain. The exclusion would be pro-rated based on the 730 days prior to the sale. If you qualify, then for example if you owned the house for 500 days, you may be able to exclude about 60% of the full exclusion, which is $250,000 for unmarried taxpayers and $500,000 for married taxpayers filing a joint return.

You do not just add the gain to your income, you record the sale on Schedule D. See the IRS Publication 523 "Selling Your Home" for the full details.

http://www.irs.gov/publications/p523/index.html

Answer 3

It depends on why you were selling.

If it was a job transfer or some other "unexpected circumstance" you can prorate the exclusion based on the days you owned and lived in the house.

See a professional!

Answer 4

Yes there is gains due if you have own the property for less then two years and its your primary residence and make more then 200 K but you can deduct your repairs and notes ect. You must claim all profits on any investment property. There are no exceptions to this rule the same thing applies you can deduct your repairs and notes. Good Luck !!