how much are capitol gains? (pay, mortgage, Washington, balance)

[skinnunen0719]

I own a home in Battle Ground WA, i have been in it for one year and now I am relocating three hours away for a job. This job is not with the same company. I am selling the home for 170k and the current loan amount is 149k. I am using a realtor for strictly the paperwork and she guesses we will pay 6500 for closing costs (including her fee) are there any exclusions to capitol gains? Its my first home and I'm moving for work. If we can't be excluded from it how much will capitol gains be?

[hml1976]

I think you can be excluded because it is a move for work but I would ask a CPA. If not it is 15% if you are in the 25% and up tax bracket. I think it is 0% if you're below that again I'd check with a CPA.

Really I'm posting because I'm shocked, we live in SW Washington as well and I can't believe you're selling your house for more than you bought for a year ago. Good for you!

[duster1979]

It would depend on which capitol you are talking about, the nation's capitol or the capitol of a certain state.

If you're talking about CAPITAL gains, you need to include the purchase price. The current mortgage balance doesn't figure into the equation.

[md21722]

Your net gain is calculated as the "original purchase price + closing costs" - "selling price"

What was the purchase price?

You are entitled to exclude a portion because of work. As long as you haven't excluded gain from the sale of a home in the past 2 years, you will be eligible to exclude up to $125,000.

Reference IRS Publication 523 starting at page 13 "Reduced Maximum Exclusion" and use worksheets on pages 36-38 for details.

[MadManofBethesda]

Originally Posted by md21722

Your net gain is calculated as the "original purchase price + closing costs" - "selling price"

What was the purchase price?

You left out capital improvements, although he may not have made any since he was only in the house for one year.

Also, not all closing costs at the time of purchase would be included as an adjustment to the cost basis.

[md21722]

Yes, I agree. I was trying to get the OP to realize that the balance due is not important, what is important is the purchase price and then steer him towards the IRS Publication for specific details.

When it comes to selling a home, tax law (and therefore the IRS) does not care if you took out a loan or paid cash. Therefore any purchasing costs associated with taking out a loan (such as the portion of the recording fees to record the deed of trust) are NOT included in the closing costs. Publication 523 tells you everything. Tax form wise, you may receive a 1099-S from the closing attorney. You will end up filing Forms 8949 and Schedule D to declare the sale.

[bbnetworking]

if you live in it for 2 years I believe there's no capital gain tax.

[Pitt Chick]

Originally Posted by bbnetworking

if you live in it for 2 years I believe there's no capital gain tax.

Okay... but the OP clearly states

Originally Posted by skinnunen0719

I own a home in Battle Ground WA, i have been in it for one year and now I am relocating three hours away for a job.

[brightdoglover]

I wonder if there will be any capital gains, after only one year.

[md21722]

It depends if you qualify for a reduced exclusion. See post #4 and IRS Publication 523.