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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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I sold my house in October of 2004, and I am planning to re-invest the money I made from the sell to purchase another home, how do I get around having to pay the taxes on the sell, or is there a way?
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

If you owned and lived in the house for 2 out of the last 5 years and it was your primary residence, you can exclude up to $250,000 ($500,000 if married filing jointly) of the gain whether you buy another house or not.


If those circumstances do not apply to you, the primary reason for the sale would have to be a "qualified" reason to allow you to exclude a portion of the gain.


If you need a more detailed analysis, please post additional details such as amount of gain, time lived in/owned, etc.


[email protected]
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: Those circumstances do not apply, The reason I sold my house was because the payments were to much for me to afford. It was either that or file bankruptcy, so I decided to sell, and I made about 35000.00 which I used to payoff some of my creditors. Is there anything I can do so I do not have to pay taxes on that money??? Thanks in advance
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: I lived in the house about 13 months.
Expert:  Jon Andrews replied 11 years ago.

Unfortunately, in the circumstances that you have posted, there is not much hope of avoiding the tax.


The next best thing is to minimize the amount of the tax. Do this by making sure that you include as part of your "cost basis" every amount that you paid to improve your house during the time that you owned it. For example, landscaping, carpet, replacement air conditioner, replacement water heater, etc. Make sure also that you include all of the title company (and similar) charges from when you bought the house. Then, at the time of the sale, make sure to deduct the amount of any commissions and title company charges, etc. in arriving at the amount of gain.


If you need more specific information regarding the gain calculation let me know. The good news is that, whatever the gain is, you will only be paying tax at a rate of 15% or less on that gain.


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