Tax Consequences of Selling My House? - Questions from Readers
Tuesday June 21, 2005
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.
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
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.
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?
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?
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.
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?
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
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.
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.