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Old 04-15-2008, 09:45 AM
 
18 posts, read 104,810 times
Reputation: 24

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We're considering selling our home after 1 year of living in it after receiving a surprise offer from a neighbor. However, we're very confused on the capital gains tax.

Here's some specific information:

After improvements and other costs, we'll make $50,000.

We're a married couple that makes a combined income of $96,000.

We lived here for 12 months.

We bought the property for $282,000

We will sell for $350,000.

I'm mostly confused on the amount based on how long we've lived here, and our income bracket. Please help!
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Old 04-15-2008, 10:22 AM
 
Location: Just south of Denver since 1989
11,600 posts, read 32,064,859 times
Reputation: 8387
you need to live there for 24 months to take advantage of the tax free $250/$500 profit; you also can only use it once every 24 months.

See Internal Revenue Service for more details.
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Old 04-15-2008, 10:35 AM
 
222 posts, read 836,432 times
Reputation: 65
When I was trying to read on it someone gave me this link to the IRS website.
http://www.irs.gov/pub/irs-pdf/p523.pdf

I know that you can minus any commissions from it, but is sounds like you might not have any since he approached you with the sale.
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Old 04-15-2008, 05:16 PM
 
Location: Columbia, SC
10,333 posts, read 20,128,123 times
Reputation: 9236
Doesn't appear you'll net much of anything. You're only taxed on net profit so you'll have small to no capital gains taxes to pay.
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Old 04-15-2008, 05:21 PM
 
Location: Barrington
60,965 posts, read 41,868,708 times
Reputation: 19652
Just curious how you are so certain you will make $50K with only 12 months into the property?

Whatever it is, I wish you could spread it around to the millions who bought before you and are upside down, right now.
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Old 04-15-2008, 09:34 PM
 
Location: Out there somewhere...a traveling man.
42,256 posts, read 55,619,917 times
Reputation: 119340
Basically since you've lived in the house for less than the 2 year requirement, you'll pay capitol gains on the difference of what you paid and what you sell it for, minus any improvements or qualified deductions. You need to check with a CPA to help you in this situation in order to not get yourself in trouble with the IRS.
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