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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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cpa advice

Customer Question

I recently sold a home in Florida and made 31k on it. I am in a 33% tax bracket. How can I avoid being taxed on this money? Do I need to reinvest in another home or can I pay off some student loans and truck loans with this money?
How soon do I need to purchase a home if I need to do so?
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

If this was your primary residence and you have owned & lived in it for at least 2 years of the 5 years immediately preceding the sale, your gain will be exempt and you will owe no tax.


Reinvestment in another home or paying off student loans, etc. will NOT help avoid any tax consequences.


If the property was not your primary residence or if you do not meet the time requirements, the gain is potentially taxable - you would need to meet certain exceptions to avoid or reduce the tax.


If that is the case in your situation, please post the details, i.e. purchase and sale dates and any circumstances affecting your decision to sell, and I will work through the various scenarios with you.


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Customer: replied 11 years ago.
Reply to Jon Andrews's Post: I have lived in the home as a primary residence for only 13 months. Purchased in may sold on june2nd.
Expert:  Jon Andrews replied 11 years ago.

Based on that information, you will be subject to tax on the gain at a rate of 15%. Your gain is calculated by subtracting your basis (original cost plus cost of any improvements minus any depreciation deductions taken) from the net selling price (gross sales price minus sales commissions and other costs of sale).


If your primary reason for selling the house was employment related, medical related, or due to an unforeseeable change in financial ability to maintain the house, you will qualify for an exemption of approximately $135,000 ($270,000 if married filing jointly) in which case you would not owe any tax on the gain.


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