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William Perez

Tax Consequences of Selling My House? - Questions from Readers

By June 21, 2005

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Dear Tax Guide, I have owned a house for about five years. I'm plan to sell the house. Is there any way I can lower the taxes on the profits?

Dear Reader,

You can exclude profits up to $250,000 (if unmarried) or up to $500,000 (if married) on the sale of your main house. You need to have owned and lived in the house for at least two years. You mentioned that you owned the house for five years. The house must also be your primary residence for at least 2 years during the 5 years you owned the home. This exclusion will reduce or eliminate any capital gains tax.

Comments
May 26, 2008 at 2:23 am
(1) daniel says:

sold property and trailor to coal mine my half went for 120,000 i lived there for 8 years but it wasnt where i lived when i sold it what would i have to pay capital gain tax

June 6, 2008 at 1:55 pm
(2) taxes says:

If you owned and lived there at least two years out of the last five years, then this entire transaction would be tax-free to you. The five-year period ends on the date of sale. Since you lived there for eight years, it sounds to me like you would probably qualify for this tax-free treatment. For more details, see Sale of Your Home.

June 22, 2008 at 10:12 pm
(3) Bill says:

I have owned my house for almost 4 years. I plan to sell this house for about twenty thousand more than what I paid for it. The house I’m buying is cheaper that what I originally paid for the house. Original purchase 265,000 selling for 280,000 then buying a house for about 220,000. Will I be hit with capital gains tax on the difference between the price of the houses?

October 18, 2008 at 10:49 pm
(4) Aaron says:

I live in maine my step dad owns an apartment building and wants to sell it to me I have a wife and he is still married to my mother if he sels it to me for under 250,000 is he tax exempt?

November 2, 2008 at 9:05 pm
(5) taxes says:

Aaron, good question. The short answer, is this property is not tax-exempt. This would be a rental property, and rental properties are taxed differently. First, there’s capital gain on the appreciation in value, and second the depreciation that has been taken is subject to a special depreciation recapture tax of 25%.

Selling a rental property can unlock previously nondeductible passive losses. However, this is not the case where property is sold (or given) to a family member (a “related person“).

So a better strategy instead of selling the building is either to (1) let the property pass to you as an inheritance, or (2) if the property has been profitable, to enter into a like-kind exchange, or (3) if the property has been unprofitable, to sell it to an unrelated party so that the passive losses get unlocked. Which strategy will be best depends on the financial and tax history of the property.

Hope this helps.

November 24, 2008 at 4:05 am
(6) Shaneen says:

What if bought farm 12 years ago for $120,000.00 which is my primary residence sold for about $850,000.00 in 2009 common-law for nine years and i’m wanting to buy new land to move closer to area for medical reasons for $750,000.00 will i have to claim as income?

November 30, 2008 at 4:18 am
(7) Frances says:

My husband & I owned our own homes when we met and continued to live in separate cities from the time we were married in 2004 until 2006 when I was able to find work in his town. We have rented out the the house I owned prior to our marriage, but now plan to sell it. My question is: does the fact that I lived in my house for at least 2 out of the last 5 years count in terms of capital gains when we have filed our taxes jointly as of 2004?

Frances

August 10, 2009 at 10:57 am
(8) Count Drakul says:

I bought a house in April 1994 for $155K. I sold it July 2009 for 251.5K. After paying off first and second mortgage holders, realtor commisions, and other applicable fees and charges, I received a check for $135K. Do I have to pay any taxes on this sale or am I eligible for some tax relief? Thanks.

August 14, 2009 at 10:22 am
(9) Count Drakul says:

Further to my last comment:

I am also building a new home which will be ready in February of 2010. Perhaps this has an impact on whether or not I pay taxes on my previous home sale.

Thanks.

September 6, 2010 at 6:01 pm
(10) Boinker says:

Sold our home in March 2010 lived in for 19 years, my profit share (30%) was about @205,000. Wife’s share (70%) was over 400,000. We are separated pending a divorce in Virginia (have to be separated a year before divorce there). Will be divorced in January 2011. I am renting and won’t buy until late in 2011, maybe.

My tax consequences are zero, right?

June 12, 2011 at 4:15 pm
(11) E gamble says:

if I lived in my house for only 10 months, will I have to pay real estate taxes if I don’t sell it at a profit.

August 10, 2011 at 7:04 pm
(12) Joe Johnny says:

Nope. No gain, no pain.

September 19, 2011 at 4:38 pm
(13) Marla Driver says:

My mother died and her house was owned by her and all of us kids (4 kids). After she died, the four kids became the owners. We sold the house and split the profit. How will that affect my taxes this year? I did not live in the house but I did put in over $10,000 into the house before it sold. We sold it for about $40,000 less than the appraisel.

July 19, 2012 at 12:27 pm
(14) whowardb says:

My fiance has lived in and owned her home for 7-years. We plan to move to another state soon. She bought the home for $240,000. We hope to get something in that neighborhood, but with the current housing market, and the lower prices new homes are selling for in her community, you never know. For the sake of an answer, lets say we sell the home for between $200,000 – $240,000, realizing no profit. What is she liable for with the money she receives from this sale. Taxes, capital gain taxes, fees from sale? Just how much of the sale price should she hope to see in cash.

September 5, 2012 at 10:13 am
(15) Maria Jackson says:

Hi I live in South Carolina and my father past away in 10/2010 leaving me his home. My family and I have lived in the home since 2007 as our primary residence to take care of my father. My husband is being relocated to Greenville SC and we are selling the home. The home will not have been in my name for two years until Jan. 2013. We are also building a new home in Greenville. My question is how will this effect our taxes. The property tax only est. the value of the home at 90,000. We are only selling the home for 87,500. w/a mortgage of 46,000 still owed on the property. How will this effect our taxes?
Thank so much for the help
Maria Jackson

March 4, 2013 at 12:05 pm
(16) Kevin says:

I am a single person, purchased and have lived in my house for 10 months and want to sell it. I purchased the house for $360,000, have put in $35,000 redoing the floors, kitchen, and A/C unit, and could now sell it for $420,000. So it seems like I would have a gain of $25,000. I am curious to know:

1. If I sell my primary residence (main home) without owning it for a 1 year, and the only reason I move is because I want to, what are the tax implications on my gains?
2. If I sell my primary residence (main home) owning it for more than 1 year, but less than 2 years, and the only reason I move is because I want to,what are the tax implications on my gains?
Note: All gains will be rolled into the purchase of another home which will be my primary residence (main home).

Any insight someone could provide would be appreciated as reading through the IRS 523 publication is not very clear.

Thanks!

March 26, 2014 at 9:57 am
(17) Claudia goldstein says:

I have my home in Maryland for sale, have lived in it for 11 years. I’m buying a home in SC that’s my intent to make residences there. I will have to settle on SC home before sale of MD home. I do not plan on moving to the SC home till MD home us sold. On settlement papers for SC a question has been asked, do I plan on making thus home my residence or a vacation home? Ifi say residence am I liable for the 6 percent sales tax on MD home?.

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