Posted by Allen Good on August 14, 2005 at 11:31:04:
Is there any tax liability?
2 year tax law for selling a house/capital Gain? - Posted by Ashlee Adams
Posted by Ashlee Adams on May 08, 2005 at 17:05:56:
We are buying a house from a friend. They built and have not owned it for two years yet. The date of their two years will be in November. Their accoutant told them they cannot sell it to us until that two year date or they will have to pay 27% capital gains on their profit. They are not contractors or builders.
I heard their was an exclusion. Used to if you were putting the money right back into another house the capital gains did not apply. They are putting the money back into another house immediately, however, the acct. said the captial gains would apply.
Any assistance?
thanks very much.
Re: 2 year tax law for selling a - Posted by dealmaker
Posted by dealmaker on May 08, 2005 at 21:28:39:
Nope, that was the old law. Not sure where he’s coming up with 27%, or does that include the state rate too!
Where the heck do you live that they got good appreciation that quickly, must be California.
Re: 2 year tax law for selling a - Posted by Carlos
Posted by Carlos on May 09, 2005 at 11:42:44:
Is this really true?
Just read the IRS website and they state that you need to have lived at the domicile for 2 years.
Are there ways around this?
Re: 2 year tax law for selling a - Posted by Tom Bazley, CPA
Posted by Tom Bazley, CPA on May 17, 2005 at 05:32:51:
The $500,000 exclusion can be pro rated IF the reason for the sale is due to a relocation in employment, for health reasons, or other unforseen circumstances. Otherwise they had to have owned & lived in the property 2 of the previous 5 years. If there’s a significant amount of profit in this house, they’d be better off waiting the few months until November to sell it.
Re: 2 year tax law for selling a - Posted by Allen Good
Posted by Allen Good on August 14, 2005 at 11:28:46:
Owned primary residence for 10 years. Original purchase price 360,000. Selling for 800,000 to purchase another residence. Is there any capital gains?
Re: 2 year tax law for selling a - Posted by Tom Bazley, CPA
Posted by Tom Bazley, CPA on August 15, 2005 at 08:21:04:
If you’re married filing a joint return the first $500,000 of gain is tax free. So in this case, there is no tax liability. If you’re a single filer the first $250,000 of gain is tax free. So you will have a gain of $190,000 taxed at 15%. If the property has ever been depreciated, you will have to recapture that.