Off Topic Tax Question

milbroco · November 4, 2006 12:52PM

I am making settlement on a house I am selling on Dec 01, 2006. My question is....Will I have to pay a Capital Gains tax on the excess funds over which I bought the house for? This is my first time (and probably my last) selling.
Thanks,
Bob

ToppsCo1lector · November 4, 2006 1:01PM

<< <i>I am making settlement on a house I am selling on Dec 01, 2006. My question is....Will I have to pay a Capital Gains tax on the excess funds over which I bought the house for? This is my first time (and probably my last) selling.
Thanks,
Bob >>

When did you purchase the house? I'm currently working out when I put up my home(which was purchased in the summer of 2005) which I'm currently renovating; to avoid the majority of capital gains taxes. Although I am not the contributor of the majority of the funds, I'm the one doing the renovations(until I move to Cali, and my Fam moves to southeast US). I'm interested in any plausible answers as well, since I'm planning on relocating to the San Diego area in May of 2007. Please, lmk.

80sJunkie · November 4, 2006 1:02PM

If you have had the house more than 2 years IE 2yrs 1 day then the first 250,000 of profit is tax free anything over the 250,000 limit is taxable capital gians

Alfonz24 · November 4, 2006 1:04PM

Did you own for more than 2 years and was it your principal residence?

If yes, then there is a $500,000 exemption if things have stayed the same for the last 2 years.

If not, are you moving for new employment or health reasons? Then you would prorate the $500,000 by the amount of time / 2 years. e.g. you lived there 18 months, then you would be allowed $500,000 * (18/24) = $375,000.

I am doing this of recollection from several years ago.

And the $500,000 is if you are married. If not married, then $250,000.

milbroco · November 4, 2006 1:17PM

Thanks for the replies everyone. It looks like I may be OK. It was my first home purchase in 1993 and is/was my primary residence. Not moving for any reason other than we are renovating a house next to my in-laws which they gave us. Actually we will be living with them until the house is ready in mid-April. And most important of all.....I iwill have my own sportscard room!
Thanks,
Bob

ToppsCo1lector · November 4, 2006 1:24PM

<< <i>Did you own for more than 2 years and was it your principal residence?

If yes, then there is a $500,000 exemption if things have stayed the same for the last 2 years.

If not, are you moving for new employment or health reasons? Then you would prorate the $500,000 by the amount of time / 2 years. e.g. you lived there 18 months, then you would be allowed $500,000 * (18/24) = $375,000.

I am doing this of recollection from several years ago.

And the $500,000 is if you are married. If not married, then $250,000. >>

Hmm. See, we're planning on staying til 2008-2009. The property is in my mothers name. I'm simply living here until I take over the mortgage or when I move out to Cali. The house was purchased for a hair under 300K, and I'm apprenticing in home renovations, I know that the value has increased into the 375-400 range so far. When I'm finished renovating(I'm adding another 1/2 bath, a laundry basin, as well as enclosing(with heat/ac/electirical etc) porch and adding an indoor jacuzzi and a pool. I should be finished with the renovations in the fall of 2007. We're planning on putting the property on the market on/around 2009. Any help here? I'm basically working on an a renovation apprenticeship as well as a B.S. marketing degree. I don't know the parameters, but I know that for a few years I'll be taking over the mortgage payments while I'm renovating. Any help?

5STAT · November 4, 2006 1:31PM

Also....is there an exemption if this is the 1st house that you've owned??
As long as it's your 1st sale...you should be fine....

lostdart58 · November 4, 2006 7:29PM

<< <i>Also....is there an exemption if this is the 1st house that you've owned??
As long as it's your 1st sale...you should be fine.... >>

Ha???........ I don't think so....

exodia · November 4, 2006 8:42PM

The site below has moe information:

http://www.bankrate.com/brm/news/real-estate/20041018a2.asp

Griffins · November 5, 2006 12:31AM

Accountants cost so little when you figure in the money and headache they can save you. If you're in CA or NY I can recommened a great one, but wherever you are it's certainly worth an hour to talk to one.

jradke4 · November 5, 2006 12:37AM

If I remember the 250,000 or 500,000 is a lifetime limit. You could sell 5 houses (with the right conditions as mentioned before) and not pay taxes if the total proceeds are not greater than 250,000 or 500,000. If you are doing renovations, I think you might be able to write some of that off the capital gains as well. Please consult a Tax person. I am not one of them.

bishop · November 5, 2006 1:03AM

Good advice Griffins.....and we are not even accountants

viking7 · November 5, 2006 1:39AM

Even though I'm in real estate I use a tax professional and consult prior to doing a deal so I know what
to expect. Also, if a customer asks tax related questions my usual script is " ask your accountant".
So many in real estate or other related jobs will try to answer questions that are better left to those that deal directly with these things daily. It is true that we learn real estate laws and some tax issues like the ones stated above but I'm not a lawyer or an accountant and I'm very aware of that fact.

Off Topic Tax Question

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