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emc011075
emc011075, Tax adviser
Category: Finance
Satisfied Customers: 2449
Experience:  IRS licensed Enrolled Agent and tax instructor
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I bought a home in December and moved. I just sold my

Customer Question

I bought a home in December and moved. I just sold my previous home. May i use the money from my previous home to make improvement on my current home?
Submitted: 7 months ago.
Category: Finance
Expert:  emc011075 replied 7 months ago.

Hi. My name is ***** ***** I will be happy to help you.

If you are asking if you can use the proceeds from the sale and in invest it into a new home to avoid capital gains, than the answer is no. You will not avoid capital gains by using the proceeds to buy/improve your new residence.

Expert:  emc011075 replied 7 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

Customer: replied 7 months ago.
what is the tax on capital gains ?
Expert:  emc011075 replied 7 months ago.

Well it depends. Your house you sold, did you own it and used it as a primary residence for at least two out of 5 years prior the sale? You may be eligible for an exclusion and depending on your tax bracket (including capital gains) it can be taxed between 0 - 20%.

Customer: replied 7 months ago.
I lived there for 12 years
Customer: replied 7 months ago.
how does that make a difference ?
Expert:  emc011075 replied 7 months ago.

In that case you can exclude up to 250K (500K if filing jointly) from your capital gains.

Now you need to determine your tax bracket. What's your filing status and your total income, including the remaining capital gains?

Customer: replied 7 months ago.
Single no dependents. I will make 28,000 on the home. I expect to make 50,000 this year
Expert:  emc011075 replied 7 months ago.

Ok. Thank you. You will make 28K after the 250K exclusion?

Customer: replied 7 months ago.
no
Customer: replied 7 months ago.
78,000
Customer: replied 7 months ago.
Then I don't have to pay a capital gains tax ?
Expert:  emc011075 replied 7 months ago.

Ok. Let me ask this way. How much did you pay for the house and how much did you sold it for?

Customer: replied 7 months ago.
I paid 110,000 for the house and sold it for 137,000
Expert:  emc011075 replied 7 months ago.

Ok. Thank you. After applying the exclusion you do not have any capital gains to report. If you got 1099S from a broker or transfer company, you will need to report it on your tax return, but you will report it as 0 gains. Did you receive any 1099S or other tax form related to the sale?

Expert:  emc011075 replied 7 months ago.

Any question? Is there anything else I can help you with today?

Expert:  emc011075 replied 7 months ago.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Customer: replied 7 months ago.
No you answered my questions. Thankyou
Expert:  emc011075 replied 7 months ago.

You're welcome. And if you found my answers helpful, a Positive Rating would be greatly appreciated. Thank you.