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I'm stumped by this tax question
Posted on 3/19/14 at 4:45 pm
Posted on 3/19/14 at 4:45 pm
I have someone who is selling their house for $125,000 and then moving in with their child. They are putting $100,000 into an addition to their kids house where they will now live. Is the sale of the home taxable?
3
Posted on 3/19/14 at 4:56 pm to Broke
quote:
Is the sale of the home taxable?
If they have owned it for two years, it shouldn't be... At least that's how I thought it was.
However, they will have that wonderful Obamacare tax
Posted on 3/19/14 at 5:17 pm to Broke
I believe that up to $250,000 of capital gains on the sale of your primary residence is excluded from tax.
Posted on 3/19/14 at 5:20 pm to Broke
They likely qualify for a Section 121 exclusion. It allows up to $500,000 of gain from the sale of a principal residence to be excluded from income. The home sold must have been owned for at least two years, and it must have been the taxpayers' home for at least 2 of the 5 years preceding the date of sale.
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