When does the Capitol Gains Tax Kickin?

[Ventucky Red]

There is NO provision for rolling over the capital gain of a personal residence anymore. There is also not any one-time deduction.

Thanks.. it has been a while since I did this...

The net check that you get at closing is NOT the capital gain.

I am aware of that, here is the math simplified.

$13.25 - Sale of Residence
($1.00) - Sales Commission, Closing Cost, Pre-Paid Property Tax, Etc....
($4.50) - Initial Cost of the house when they bought it.

$7.75 - total "Walk Away"

($5.00) - Exemption

$2.25 Proceeds subject to CapitAl Gains

Does this look right to you?

 

[flyingron]

Don't forget anything that could be considered a capital improvement over the years (or work done to sell the property) can be subtracted as well, but yes you have it right.

 

[luvflyin]

If you've lived in the house for 2 of the past 5 years then you can claim it as a primary residence. Because of that, you do not have to report the first $250,000 of profit from the sale. If you are married then it becomes $500,000. There are pro-rated amounts if you rented the property. No, I don't know what happens if you also lived 2 of 5 years in another house. See your tax advisor.

What you paid for the house is only part of your basis. If you keep all your home improvement receipts then they add to the total too.

Ok. Looked this up at IRS.gov. It's not so much that anything is pro-rated. There is Depreciation Recapture though. Just because you lived there for 2 years don't let you off the hook for that. So yeah you are going to be paying something that comes under the general category of capital gains and it is at your ordinary income tax rate, not the capital gains rate.

 

[Ventucky Red]

Your SIL has bigger problems than the IRS..

If you're referring to the husband... as my wife put it, it was either him or no one... she got lucky....

How do you stand living in the People's Republik?

I grew yup in Devon and Bryn Mawr, and I do miss PA especially this time of year. But we like the ocean and being able to use it year round better... maybe when that craving stops, it is back to PA for us.