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Started By
Message
Gains from Sale of House
Posted on 11/28/16 at 1:38 pm
Posted on 11/28/16 at 1:38 pm
Built house in 2009
Mortgage $174,800
Value at Closing $181,000
Value today $178,000
Payoff $157000
Lets assume it sells at today's value of $178,000
Cash after realtor fees of 4%: $170,880
$13,880
Because I have not gained anything from the sale because the house is worth less then the original appraisal amount, do I owe any taxes on the $13,880.
Not doing a 1031(?) because this is the sale of an asset in a divorce.
So do ex and I split $13,880 because the house actually lost value or is it all taxed?
ETA: Corrected sell to sale
Mortgage $174,800
Value at Closing $181,000
Value today $178,000
Payoff $157000
Lets assume it sells at today's value of $178,000
Cash after realtor fees of 4%: $170,880
$13,880
Because I have not gained anything from the sale because the house is worth less then the original appraisal amount, do I owe any taxes on the $13,880.
Not doing a 1031(?) because this is the sale of an asset in a divorce.
So do ex and I split $13,880 because the house actually lost value or is it all taxed?
ETA: Corrected sell to sale
This post was edited on 11/28/16 at 4:00 pm
3
Posted on 11/28/16 at 1:55 pm to ThatsAFactJack
It's Sale - not sell.
Was this your principal residence? If so - look at section 121 exclusion on the gain.
If not your personal residence, if the sales price is lower than your purchase price - most likely no gain depending on how much depreciation was taken during your ownership.
Was this your principal residence? If so - look at section 121 exclusion on the gain.
If not your personal residence, if the sales price is lower than your purchase price - most likely no gain depending on how much depreciation was taken during your ownership.
This post was edited on 11/28/16 at 1:57 pm
Posted on 11/28/16 at 1:58 pm to NEWBIE
quote:
NEWBIE
quote:
It's Sale - not sell.
Thank you. I always confuse the two.
Yes principal residence.
Section 121- can you breakdown for the lay person?
Posted on 11/28/16 at 1:59 pm to ThatsAFactJack
Section 121
If there was a gain, it would not be recognized if you have resided in the property for 2 of the last 5 years.
If there was a gain, it would not be recognized if you have resided in the property for 2 of the last 5 years.
This post was edited on 11/28/16 at 2:02 pm
Posted on 11/28/16 at 2:01 pm to NEWBIE
So anything under $250,000 for single or $500,000 for joint is excluded from taxes?
Posted on 11/28/16 at 2:01 pm to ThatsAFactJack
quote:
Section 121- can you breakdown for the lay person?
You can exclude from income any gain up to $250k (500K if you're married filing joint) on the sale of your principle residence.
Posted on 11/28/16 at 2:24 pm to ThatsAFactJack
The only numbers that matter are the sales price, the closing costs you pay at sale, and the basis (for most personal residences, this is basically the purchase price since fully personal homes aren't depreciated).
what is value at closing? was this your purchase price? I assume it is.
You are going to sell it for 171K (approx) net of commission paid.
You purchased it for 181K.
You have a loss of 10K. Since it's a personal asset, the loss is not deductible.
Whatever cash you get, the judge will tell you how to split it, but there is no tax impact on this.
1031 is never an option for personal homes, regardless of divorce. Sorry you are going through a divorce.
what is value at closing? was this your purchase price? I assume it is.
You are going to sell it for 171K (approx) net of commission paid.
You purchased it for 181K.
You have a loss of 10K. Since it's a personal asset, the loss is not deductible.
Whatever cash you get, the judge will tell you how to split it, but there is no tax impact on this.
1031 is never an option for personal homes, regardless of divorce. Sorry you are going through a divorce.
This post was edited on 11/28/16 at 2:25 pm
Posted on 11/28/16 at 2:31 pm to ThatsAFactJack
All proceeds are yours, but I have to ask. In what hellhole do you live in where value is less today than it was in the crash? I'm in real estate and has no idea such an area existed in the US.
Posted on 11/28/16 at 2:58 pm to LSUFanHouston
quote:
LSUFanHouston
I thought 1031 was the term for when using proceeds from real estate transaction for another real estate transaction.
We are splitting the proceeds 50/50. Doubt a judge will ever get involved in our divorce. We have agreed on everything and just paying a lawyer to file the paperwork.
So based off of my number it looks like we are splitting roughly $14k. I was just unsure of the tax implications.
Thank you!
Posted on 11/28/16 at 2:59 pm to ItNeverRains
quote:
ItNeverRains
quote:
All proceeds are yours, but I have to ask. In what hellhole do you live in where value is less today than it was in the crash? I'm in real estate and has no idea such an area existed in the US.
Broussard/Youngsville area. Bought when prices were high. That area is just feeling the effects of the oil/gas industry tanking.
The house value has stayed stagnant or declined slightly since we built.
Posted on 11/28/16 at 3:36 pm to NEWBIE
quote:
Lets assume it sales at today's value
quote:
It's Sale - not sell
Nope, try again. It should be *sells* in this instance. Not that it really matters.
Posted on 11/28/16 at 5:13 pm to ThatsAFactJack
quote:
I thought 1031 was the term for when using proceeds from real estate transaction for another real estate transaction.
It is when you are rolling the proceeds from the sale of one business real property into another.
Personal residences instead have the exclusion provisions.
No worries, it's easy to get confused
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