Federal Income tax on real estate (sale, price, property, expensive)

[alsidw]

I own a house that I inherited and plan to sell it and buy a less expensive home. Is the amount of money that I do not use to buy the house taxable as income. I am over 65 and planned to use the difference between the sale of the house and the cost of the new house to live on. Example; if i sell my home for 300k and buy a retirement home for 150k will the remainder of 150k be taxed in any way??

Sidney in New Orleans

[rational1]

My understanding is that it depends on whether you have lived in it and for how long. Definitely check it out with a tax consultant before making any irreversible decisions.

[manderly6]

I believe the holding period for property you inherited is one year. That would let you treat any gain as long term instead of short term.

If this was your primary residence it would be fairly straight forward. I'm not sure though on property you inherit. You would still need to figure out a cost basis or fair market value though to figure out what the gain would be. Probably worth talking with a tax professional.

[rjrcm]

This may help:

Publication 523 (2011), Selling Your Home

If it's been your main home for at least 2 out of the last 5 years, you can exclude $250K single, $500K married.

I also suggest talking to a tax professional, especially to be sure that any inheritance related tax issues are also addressed.

[alsidw]

I inherited the property 40 years ago and have live in it the entire time. So I guess I am ok. Just had a quick " OH Gosh" moment. Moving is no fun and finding another house is worse.
Sid

[mortimer]

Originally Posted by alsidw

Example; if i sell my home for 300k ...

You get an exclusion of $250k, so only $50k is taxable.

Since it is a LT gain, you would owe 15% of that at most.

If you are in a lower tax bracket, the taxable gain is less than that.

Originally Posted by alsidw

... buy a retirement home for 150k will the remainder of 150k be taxed in any way??

The price of your retirement home has no effect on the tax you pay on the house you are selling.

For all of the above, I'm assuming you are single.

[manderly6]

Originally Posted by mortimer

You get an exclusion of $250k, so only $50k is taxable.

Since it is a LT gain, you would owe 15% of that at most.

If you are in a lower tax bracket, the taxable gain is less than that.

I thought you got to exclude the cost basis before figuring out the gain.

[mortimer]

Originally Posted by manderly6

I thought you got to exclude the cost basis before figuring out the gain.

You are correct.

I should have said "potentially" taxable. In any case, anyone worrying
about paying 15% on $50k ( at most ) of a $300k sale is a cheap b@stard.