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Old 04-01-2018, 02:04 AM
 
758 posts, read 568,737 times
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After owning my condo for about 4 years, i decided to sell after chickening out in white-hot market in bay area, fearing impending correction. Now since I am single, i can claim up to 250k tax-free that is a nicety but do i have to purchase another home right away?

On these articles, that got me jumping twice:

1.
https://www.journalofaccountancy.com...exclusion.html

TAXPAYERS MUST RECOGNIZE GAIN ON ANY portion of a residential property they donít use for residential purposes. Any post-May 6, 1997 depreciation allowable on the property triggers recognition of otherwise excludable gain.

I wrongly understood the gain proceeds must be used for another residential property to qualify for gain but correct meaning appears to be, any portion of property not used for residential purpose must report gain. Well wtf, how do find about the non-residential usage part? it is also residential!

2.
Then this also got me concerned after glancing through but careful reading appears it is OK. Wrongly understood by assuming if gain is put into investment then it is a income but correct understanding is only if that investment incurs a gain then it is an income. Well so far so good!


...The gain you get from the sale of your house or other assets will not be considered income. If you took the money and put into investments that result in a gain or income to the investment income is income for support. But since you are putting the money back into another house or other purchases it is not income for support...
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Old 04-01-2018, 03:43 AM
 
64,568 posts, read 66,100,109 times
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stop ! you are very confused .

as long as it was your primary home for any 2 out of 5 year peroid and you did not use it as a rental property or 2nd home (non primary ) , you are home free .

you can sell it and exclude 250k in gains if single and 500k if a couple and you do not have to buy anything else to get it.

there is no longer a requirement to even roll the gains in to another home like there was pre 1997 .
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Old 04-01-2018, 04:29 AM
 
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If two people on the deed are not a married couple is it still 500k exempt from taxes?

What if there are more than 2 people owning a house?
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Old 04-01-2018, 04:44 AM
 
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it follows the tax code-married couples filing jointly.

There is no limit to the number of home co-owners who can claim the IRC 121 principal-residence-sale tax exemption up to $250,000 each. Theoretically, you could have three, four, five or six home sellers who each can claim up to $250,000 tax-free principal-residence sale profits if they each meet the 24-out-of-last-60-months ownership and occupancy tests in the same home.

The IRC 121 tests are applied individually to each co-owner so they need not have owned and occupied the residence at the same time. But each must be on the title for the required time.
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Old 04-01-2018, 07:23 AM
 
Location: NC
6,081 posts, read 7,027,359 times
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And note, the exclusions are on gain, which means profit. If you sell a house you bought for $200,000 and you get $250,000 net from the sale, there is no gains tax. Same if you bought for $600,000 and sell for $800,000. From the amount you sell for you get to subtract out what you paid for it, what certain improvements cost, and certain sales expenses. Most people who live in a home for only a few years never need to pay the capital gains tax. The people who are hit are those who bought a long time ago or who own in a very fast appreciating area.
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Old 04-01-2018, 10:42 AM
 
758 posts, read 568,737 times
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Quote:
Originally Posted by mathjak107 View Post
stop ! you are very confused .

as long as it was your primary home for any 2 out of 5 year peroid and you did not use it as a rental property or 2nd home (non primary ) , you are home free .

you can sell it and exclude 250k in gains if single and 500k if a couple and you do not have to buy anything else to get it.

there is no longer a requirement to even roll the gains in to another home like there was pre 1997 .
thx, those were written in a way that is easily confused. i think i am in the clear now.
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Old 04-01-2018, 08:56 PM
Status: "Summer, please don't leave!" (set 7 days ago)
 
Location: Asheville, NC
11,469 posts, read 25,695,605 times
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Quote:
Originally Posted by mathjak107 View Post
stop ! you are very confused .

as long as it was your primary home for any 2 out of 5 year peroid and you did not use it as a rental property or 2nd home (non primary ) , you are home free .

you can sell it and exclude 250k in gains if single and 500k if a couple and you do not have to buy anything else to get it.

there is no longer a requirement to even roll the gains in to another home like there was pre 1997 .
I understand the 2 out of 5 years as a primary residence. What if after living there for 2 years and you rent the other 3 and then decide to sell, how does that work?
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Old 04-01-2018, 09:00 PM
 
Location: Raleigh NC
7,754 posts, read 6,114,541 times
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as long as you close the sale before the end of that 3rd year.
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Old 04-02-2018, 02:12 AM
 
64,568 posts, read 66,100,109 times
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Quote:
Originally Posted by beckycat View Post
I understand the 2 out of 5 years as a primary residence. What if after living there for 2 years and you rent the other 3 and then decide to sell, how does that work?
it is a rolling 5 year period . as long as you did not rent it first you are fine . you can't get the full exclusion if you rent it for the first 3 years and live there the next 2. but going the other way is fine . live there 2 years and rent it 3 works well. changes in laws in 2009 took away the full exclusion if it was a rental ,2nd home or investment property first .
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Old 04-03-2018, 07:25 PM
Status: "Summer, please don't leave!" (set 7 days ago)
 
Location: Asheville, NC
11,469 posts, read 25,695,605 times
Reputation: 4201
Quote:
Originally Posted by mathjak107 View Post
it is a rolling 5 year period . as long as you did not rent it first you are fine . you can't get the full exclusion if you rent it for the first 3 years and live there the next 2. but going the other way is fine . live there 2 years and rent it 3 works well. changes in laws in 2009 took away the full exclusion if it was a rental ,2nd home or investment property first .
I thought that's how it worked. What if you live in it the first year and then rent 3 years and then live in it the last year? I believe you are still in the clear.
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