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Message
I've got a dumb question regarding selling a house
Posted on 2/10/18 at 7:10 pm
Posted on 2/10/18 at 7:10 pm
So, I have someone asking me about selling their house. They've lived there about 10 months. They hate it and want to move. Anywho, here's the question. They obviously won't meet the 2 year exclusion rule so if they sell before April that makes one year it'd be shirt term cap gains taxed at ordinary rstes, correct? Anytime between April and 2 year mark next April would be long term cap gains taxed at 20%?
I feel like this is a simple answer just want to make sure I'm not overlooking something, and I've told them to seek the advice of their CPA.
I feel like this is a simple answer just want to make sure I'm not overlooking something, and I've told them to seek the advice of their CPA.
3
Posted on 2/10/18 at 7:15 pm to Mingo Was His NameO
Posted on 2/10/18 at 7:19 pm to Mingo Was His NameO
I've looked through that. I understand the homeowners exclusion. I'm talking with specifically calculating the nature of the gain. Again, I'm pretty sure I'm correct just want to make sure I'm not overlooking something. For instance, if you get transferred for work l
Less than 2 years in you can prorate the exclusion, but they won't qualify for that.
Less than 2 years in you can prorate the exclusion, but they won't qualify for that.
Posted on 2/10/18 at 7:54 pm to Mingo Was His NameO
Ya, we almost had to deal with this issue ourselves. Bought a house in New Orleans and then received an offer we couldn't refuse to move to TX. Thankfully, it was about close enough to two years where we could set closing about 2 weeks past our two year purchase date anniversary.
This post was edited on 2/10/18 at 7:55 pm
Posted on 2/10/18 at 8:39 pm to Teddy Ruxpin
Will there actually be a gain after 10 months?
What market?
What market?
Posted on 2/10/18 at 8:55 pm to ItzMe1972
quote:
Will there actually be a gain after 10 months?
What market?
Yes. Estimates show about 40k. Dallas market, very desirable neighborhood. From what I understand, they bought from an investor that bought the house and ended up moving to like California or somewhere and was having trouble selling it so it was a good price, and they did some cosmetic work themselves.
Posted on 2/11/18 at 9:54 am to Mingo Was His NameO
It’s important to note that they will be taxed on the gain in purchase price MINUS selling fees and any money spent fixing up the house.
That is if they move before 2 years.
That is if they move before 2 years.
Posted on 2/12/18 at 2:31 am to Mingo Was His NameO
If I were in their shoes I'd figure out how to suck it up for another year and qualify for the exclusion.
Posted on 2/12/18 at 7:26 am to foshizzle
quote:
If I were in their shoes I'd figure out how to suck it up for another year and qualify for the exclusion.
I agree, but it's their house and their money. They are moving for jobs and young kids school so I kind of get it.
I'm just trying to make sure my OP is correct.
Posted on 2/12/18 at 2:53 pm to Mingo Was His NameO
quote:
Yes. Estimates show about 40k.
After all fees to sell the house?
quote:
they did some cosmetic work themselves.
Any improvements made can be deducted from the gains as well
They'll likely be way less than $40k in gains after all of that, I'd imagine.
Posted on 2/13/18 at 6:34 am to Mingo Was His NameO
quote:
They are moving for jobs and young kids school so I kind of get it.
Depending on the mortgage note and property taxes they might even be better off renting it for six months and leaving it vacant the rest of the time rather than pay $8k in taxes.
Or work out some deal where they rent to someone for awhile and let them buy it outright after the time expires. They'd have to give up something for it but probably not $8k.
This post was edited on 2/13/18 at 6:35 am
Posted on 2/13/18 at 8:27 am to ATLdawg25
quote:
gain in purchase price MINUS selling fees and any money spent fixing up the house
This is the right answer. But if they still end up with a net gain, especially after about a year, good for them-tell them to stash away 15% of that until tax time and be happy about it.
Posted on 2/13/18 at 8:31 am to AUjim
quote:
This is the right answer. But if they still end up with a net gain, especially after about a year, good for them-tell them to stash away 15% of that until tax time and be happy about it.
Right. So, before 1 year short term gain, after 1 year before year 2 LTCG, correct?
Posted on 2/13/18 at 9:53 am to Mingo Was His NameO
Correct.
And to get the exclusion, it has to be used as primary residence for 2 out of the previous 5 years.
And to get the exclusion, it has to be used as primary residence for 2 out of the previous 5 years.
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