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Old 12-09-2017, 01:14 PM
 
Location: Washington County, ME
1,549 posts, read 2,249,671 times
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OK - i came back to the thread late, and didnt read all the posts after the first reply to mine... but i'm REAL confused...

I've owned my house since 1995.

It's paid for. I'm going to use most of the proceeds to buy another house.

What is going to be taxed as "income?" It's going to be less than $200K and i'm disabled - if that makes a difference. Thanks.
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Old 12-09-2017, 01:23 PM
 
3,759 posts, read 2,923,193 times
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As I understand it, none will be taxed as income.
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Old 12-09-2017, 01:32 PM
 
1,374 posts, read 541,094 times
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Quote:
Originally Posted by photogal9 View Post
Here is the link:

https://waysandmeansforms.house.gov/...ection_hr1.pdf


Copy and pasted post #90 by dothetwist

Sec. 1402. Exclusion of gain from sale of a principal residence.
Current law: Under current law, a taxpayer may exclude from gross income up to $500,000 for
joint filers ($250,000 for other filers) of gain on the sale of a principal residence. The property
generally must have been owned and used as the taxpayer’s principal residence for two out of the
previous five years. A taxpayer may use this exclusion only once every two years.
Provision: Under the provision, a taxpayer would have to own and use a home as the taxpayer’s
principal residence for five out of the previous eight years to qualify for the exclusion. In
addition, the taxpayer would be able to use the exclusion only once every five years. The
exclusion would be phased out by one dollar for every dollar by which a taxpayer’s adjusted
gross income exceeds $500,000 ($250,000 for single filers). The provision would be effective
for sales and exchanges after 2017.

From this post, link attached. (Yes, I am confused as this would more than likely effect me)
GOP Tax Plan Change to Rules for Sale Principal Residence
All the screaming the wealthy should pay more taxes and this will affect the wealthy more. Have income more than $250k/$500k and the exclusion decreases. Those who move frequently will have little to no capital gains even if they move before the 5/8 years when you factor in improvements and sales costs ie realtor fees and closing costs. Stop worrying about something that will likely not affect you. If a company moves you around a lot and it does at some point cost you, then negotiate compensation.

Quote:
Originally Posted by carnivalday View Post
As I understand it, none will be taxed as income.
You are correct. Profits on sales goes in capital gains not income so it is taxed at I believe 15%.

Quote:
Originally Posted by Jellybean50 View Post
OK - i came back to the thread late, and didnt read all the posts after the first reply to mine... but i'm REAL confused...

I've owned my house since 1995.

It's paid for. I'm going to use most of the proceeds to buy another house.

What is going to be taxed as "income?" It's going to be less than $200K and i'm disabled - if that makes a difference. Thanks.
Nothing. For one it is not income but capital gains and two you qualify for the exemption. It is not the sale price but the difference of sold price minus realtor and other fees minus any improvements minus original price you paid. You qualify so you need not report anything at this time.

Last edited by Marka; 12-14-2017 at 12:32 AM.. Reason: please, learn to multiquote
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Old 12-09-2017, 02:12 PM
 
Location: Raleigh NC
7,825 posts, read 6,176,557 times
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there remains confusion. it's not whether you earn $250K/$500K as your everyday income. It's the GAIN on the sale of the home.

So for Jellybean and all others - as long as you've lived (primary residence) in the house any 5 of the last 8 years, then you take your GAIN (sale price - deductible expenses of sale and improvement along the way-original purchase price) MINUS $250k/500k. If that number is still positive, then you will pay the capital gains rate. That will typically be 15%, until your TAXABLE income (which would include that net gain) exceed $400K for the year.

And no one has said the rules for "exceptions" to the time period would be changed. Those include moving for military service and distance you move for a job.
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Old 12-10-2017, 08:22 PM
 
459 posts, read 262,068 times
Reputation: 1697
Sec. 1402. Exclusion of gain from sale of a principal residence.
Current law: Under current law, a taxpayer may exclude from gross income up to $500,000 for
joint filers ($250,000 for other filers) of gain on the sale of a principal residence.
The property
generally must have been owned and used as the taxpayer’s principal residence for two out of the
previous five years. A taxpayer may use this exclusion only once every two years.
Provision: Under the provision, a taxpayer would have to own and use a home as the taxpayer’s
principal residence for five out of the previous eight years to qualify for the exclusion. In
addition, the taxpayer would be able to use the exclusion only once every five years. The
exclusion would be phased out by one dollar for every dollar by which a taxpayer’s adjusted
gross income
exceeds $500,000 ($250,000 for single filers).
The provision would be effective
for sales and exchanges after 2017.


So, is the bolded part ($250K for a single person) total adjusted gross income, or gain on the house? Do you include gains on the house as income in the year you receive the proceeds from the sale? Prior responses, and the clauses bolded above seem to be conflicting.
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Old 12-10-2017, 09:57 PM
 
Location: Raleigh NC
7,825 posts, read 6,176,557 times
Reputation: 6947
Gain
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Old 12-13-2017, 02:47 PM
 
1,374 posts, read 541,094 times
Reputation: 2396
Nothing conflicting, The exclusion is for $250K for single and married filing separately and $500K for married filing jointly for capital gains not for income. The second part is the new phasing out of capital gains exclusion for those in higher income brackets. If you make over $250K as a single or filing separately filer or $500k if you file jointly then you lose $1 for every dollar you make over that amount.

For example two couples

Couple A purchased their home back in 1960 for $14,000k. Their current gross income is $75K They put no deductible improvements for simplicity sake in the house and sold the house in 2018 for $550K. They paid say $36k in closing costs and realtor fees bringing the sale price down to $514K. Since they file jointly the capital gain of $500K is excluded and their income is under $500K so they don't have to take any money away from the exclusion.

Couple B same scenario but their gross income is $560K or $60K over the $500K income threshold. They now only have a $440K exclusion so they have to pay taxes on that $60K as capital gains at 15%.

Nothing has changed for the average single filer, they still pay for any gains over $250K in the above scenario at the very same tax rate as before. The only change is to the wealthy single filer, he will like couple B, lose $1 for every $1 over $250K he makes of the $250K exemption and by the time he makes $500K the exemption is all gone and he must pay on that $500K.



This change means that wealthier people will pay more. The only change that might affect the average person is the time change from 2/5 to 5/8; however, as someone mentioned that certain moves that are done short of these times are exempted anyways and nothing in the new bill says otherwise.
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