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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
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Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I have a client who wants to purchase a home and the home furnishings

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I have a client who wants to purchase a home and the home furnishings from the seller. The seller is not going to include the price of the furnishings in the contract price of the home for purposes of real estate evaluation. The seller is concerned if he/she will have to pay taxes on the sale of the furnishings in addition to the capital gains tax he/she will have to pay on the sale of their primary home. The seller is aware of the $500,000.00 exclusion; however; they will still have to pay a capital gain tax on the portion that exceeds the gain in excess of the exclusion. ie they purchased the house for $150,000.00. They are selling it for $750,000.00 ten years later. That would mean the seller would have to report that sale and recognize a gain of $100,000.00 right? Additionally the seller is concerned about the furnishings in which are being sold for $100,000.00 which contains furniture and paintings. How would the treatment of of the sale of the furnishings be? Capital gain as well? The seller purchased the furnishings for $50,000.00. So would the $50,000.00 in gain on the sale be considered capital gain or ordinary gain taxed at the sellers ordinary tax rate? Please advise.
Submitted: 8 months ago.
Category: Finance
Expert:  Megan C replied 8 months ago.

Megan C :

Hello, my name is XXXXX XXXXX I am going to help you today

Megan C :

The client will have to pay capital gains tax on both the sale of the home and the sale of the furnishings. None of the sale of the furnishings can be excluded.

Megan C :

If they held the furnishings for longer than 1 year, then it is taxed at the preferential capital gains rates

Megan C :

They will have $100,000 gain on the sale of the home which will be taxed.

Megan C :

So, all in all they have $150,000 in capital gains to pay

Megan C :

Do you have any questions?

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12662
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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