Sold first home - Do you pay capital gains tax? (rent, taxes)
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I am closing on my first home in a couple of days. How will this hit me come tax time?
Also I had to rent the house out for 17 days prior to closing due to the hold-up with the government shutdown. Buyer went ahead and moved into my home so I wouldn't have to continue paying for 2 places. How will the renting out for those 17 days affect my taxes?
Thanks in advance.
Last edited by diddlydudette; 10-28-2013 at 04:01 PM..
Was it 17 days or was it 14 days? The IRS lets you rent out your home tax free for 14 days. Anyway, you might have to pay capital gains tax IF you don't do a 1031 exchange and if your gain exceeds approx $250,000
I lived in the house for 8 years before selling. I won't make close to 250,000 from the sell so that means I won't be penalized at all? That would be wonderful.
14 days??? Well they paid to rent Oct 14th and closing date is Oct 30. Oh well,m maybe I won't get hurt too bad for that short amount of time. I only had to do it because of the government shutdown so that's their fault so looks like another penalty I have to pay for their darned shutdown.
how long did you own it? If longer than 2 years you can exclude up to $250k, if married up to $500k.
it actually works like this. you need to own the home as a primary for 2 out of 5 years. the order does not matter.
if you rent the house for 14 days or less you can keep the rent tax free and you can not take any rental write offs.
if you rent the house for more than 15 days it becomes a rental. that still is okay as long as it was your primary for 2 out of 5 years.
the difference is not only do you have to declare the rent but you have to take depreciation too. if you do not take depreciation on a rental you will get burned because it gets recaptured whether you took it or not, in your case you are talking just days so it isn't much .
the depreciation gets recaptured at up to a 25% tax rate when you sell.
that gets subtracted off the exclusion of 250k if single or 500k if married.
as long as you are under you are fine. if you were over you could do a 1031 exchange on the balance that was over .
depreciation is usually figured by subracting out the land value from the purchase price , , then dividing the balance by 27.5 years.
it actually works like this. you need to own the home as a primary for 2 out of 5 years. the order does not matter.
if you rent the house for 14 days or less you can keep the rent tax free and you can not take any rental write offs.
if you rent the house for more than 15 days it becomes a rental. that still is okay as long as it was your primary for 2 out of 5 years.
the difference is not only do you have to declare the rent but you have to take depreciation too. if you do not take depreciation on a rental you will get burned because it gets recaptured whether you took it or not, in your case you are talking just days so it isn't much .
the depreciation gets recaptured at up to a 25% tax rate when you sell.
that gets subtracted off the exclusion of 250k if single or 500k if married.
as long as you are under you are fine. if you were over you could do a 1031 exchange on the balance that was over .
depreciation is usually figured by subracting out the land value from the purchase price , , then dividing the balance by 27.5 years
thanks for expanding. You have more umpf in your fingers than I. .
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Sold first home - Do you pay capital gains tax?
1st home (primary residence) or 30th home... selling a primary residence for gain is one of the few ways to make a nice tax free income in the USA (If $500k in gains is adequate tax free income every 24 months (if with 'partner'... new terms in IRS code))
You gotta wonder what are one of the many causes of 'Housing Bubbles...' ... Gov dinking with economics / markets It is BEST to buy a piece of property with a tepee and a mailbox on it, that is right in the way of imminent development progress. (BTDT a few times) ...Plus many other ways to skin the cat,D Publication 523 (2012), Selling Your Home
I like to operate within the many 'special cases' allowing to retain gain when trading more frequently than 24 months.
As a retiree, I'm a little old for this one,,,,"Multiple births resulting from the same pregnancy."
as an ex-retiree, this one with do (if you work enough annually to meet the minimum requirements of employment)
Change in Place of Employment
at a certain age these 'reasons' become more likely (darn)
Health
Unforeseen Circumstances
it actually works like this. you need to own the home as a primary for 2 out of 5 years. the order does not matter.
if you rent the house for 14 days or less you can keep the rent tax free and you can not take any rental write offs.
if you rent the house for more than 15 days it becomes a rental. that still is okay as long as it was your primary for 2 out of 5 years.
the difference is not only do you have to declare the rent but you have to take depreciation too. if you do not take depreciation on a rental you will get burned because it gets recaptured whether you took it or not, in your case you are talking just days so it isn't much .
the depreciation gets recaptured at up to a 25% tax rate when you sell.
that gets subtracted off the exclusion of 250k if single or 500k if married.
as long as you are under you are fine. if you were over you could do a 1031 exchange on the balance that was over .
depreciation is usually figured by subracting out the land value from the purchase price , , then dividing the balance by 27.5 years.
1) Since we are going down this road, would the depreciation be only for 17 days or does he take the full year.
2) Would he also now be able to claim all other recent improvement and repairs as previous improvement, prorated taxes, and days of mortgage interest
3) Can the agent commission be taken against the rental property and carry the loss expense forward.
All this for 3 days over the 14.
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The IRS lets you rent out your home tax free for 14 days. Anyway, you might have to pay capital gains tax IF you don't do a 1031 exchange and if your gain exceeds approx $250,000
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