selling condo capital gains?

Question

If i sell my condo in pennsylvania am I resposible for any capital gains taxes? Im 56yrs old and single

it is my principle residence and im getting about 60000

Answer 1

Maybe, maybe not. It depends upon the circumstances.

If you owned and lived in it as your principal residence for 2 of the last 5 years immediately prior to the sale you may be eligible to exclude some or all of the gain from tax. If your filing status is Single, Head of Household, or Qualifying Widow(er) the exclusion is $250,000. If your fiing status is Married Filing Jointly the exclusion is $500,000 if your spouse also meets the ownership and occupancy tests.

If you had to sell in less than 2 years you might qualify for a proportional exclusion if the reason for the sale was job loss, job move, illness, or other unforseen circumstances.

Any gain over the exclusion amount is taxed as a capital gain. The rate depends upon how long you owned your home. If it was one year or less it's a short term captial gain and is taxed as ordinary income. If you owned it for more than one full year it's taxed as a long-term capital, usually at 15% unless your marginal rate is 15% or less where the rate drops to 5%.

I'm not sure what the PA treatment is, but PA is famous for it's flat rate income tax and lack of any meaningful deductions or exemptions. I would not be surprised if it's taxable in PA regardless of the Federal treatment.

Answer 2

Are you going to realize capital gains from the sale? In other word will you sell it for more than you paid for it? Is it your principle residence?

If you realize capital gains on your principle residence then you can make $250,000 tax free. If it is an investment property then you will have to pay capital gains plus recapture of all depreciation.

Now there is also such a thing as AMT which may affect the above scenarios, but this is not the place to discuss all the ins and outs. Most people don't tangle with AMT if Congress applies its annual patch.

Answer 3

Hopefully you well sell the condo for more than you paid for it. Otherwise you have a non-deductible loss.

If you meet the sale of home rules, you can exclude up to $250K.

1. Looking at the date of sale and going back 5 years, was this your primary residence for at least 2+ years?

2. Same time frame, did you own it for at least 2+ years?

3. Have you excluded the gain from any other sale in the last 2 years?

4. Have you ever rented the proprty out? If so any gain due to depreciation is recaptured at your marginal tax rate (capped at 25%).

FYI, the old over-55 one time exclusion of $125K no longer exists.

Answer 4

Hard to tell how much you'd have to pay. The whole $10,000 won't be taxed - you can deduct items like realtor's commissions which will probably take care of a lot of the gain. If you have owned it for more that a year when you sell it, you would pay long term capital gains tax on the gain, which would be less than the ordinary income rate you'll pay if you sell it when you've owned it for a year or less.