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Lev
Lev, Tax Advisor
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I sadly have $200,000 in stock losses carried over from the

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I sadly have $200,000 in stock losses carried over from the past - I have been unable to sell my home I purchased 16 years ago so now I believe that since I moved out a year ago, if I don't sell it within 2 more years I will be taxed on the gain (I am underwater on my loan or I would just sell it at any price to avoid the rule, I believe, that I will be taxed on any gain after I have moved out for 3 years - bought it for $121,000 in 1992, worth maybe $250,000 now but before I moved out it appraised at $350,000 so I did a loan at 80% - $280,000 and still owe $277,000 ). If I am unable to sell it until beyond three years from when I moved out, can my gain go against my previous stock loss and not be taxed. Similarly, if I at some point I could purchase a property as an investment and sell it as a gain after say five years can I use this gain against previous stock losses?
Submitted: 8 years ago.
Category: Tax
Expert:  Lev replied 8 years ago.

You may use capital losses to offset other capital gains in following years.

If you have net capital loss in any specific year - you may only deduct $3000 of your capital losses with the rest to be carried over again.

 

For selling your home - please refer to the IRS publication 523 - http://www.irs.gov/pub/irs-pdf/p523.pdf - page 10.

To use exemption - you need to satisfy two separate tests:

  • ownership test - own the property for at least two years out of last five before the sale
  • use text - Use the property as a primary residence for at least two years out of last five before the sale

You would not have any problem with ownership test.

To satisfy use test - you need to complete the sale within three years after you moved out.

 

If you find out that all or part of capital gain from selling your home would be taxable - yes - it may be offset by capital losses that you have.

Customer: replied 8 years ago.
I am seeking a specific answer to my question
Expert:  Lev replied 8 years ago.

If I am unable to sell it until beyond three years from when I moved out, can my gain go against my previous stock loss and not be taxed.

- Yes - you may use capital losses that you carry over to offset your taxable capital gains from selling your residence.

Similarly, if I at some point I could purchase a property as an investment and sell it as a gain after say five years can I use this gain against previous stock losses?

- Yes - you may use capital losses that you carry over to offset your taxable capital gains from selling investment property.

Customer: replied 8 years ago.
So the proceeds from selling a home is the same type of gain/loss as stocks and can be used to offset past losses from the sale of stocks, even if most of the losses ($150,000 of the $200,000) are short-term losses? I just want to know for sure as the accountant I use for my taxes didn't know if the proceeds/gain from the sale of my home (or an investment home) could be applied as the same type of gain/loss as stocks. That's all I need to know. Thanks so much.
Expert:  Lev replied 8 years ago.

You need to separate proceeds and capital gains.

If you purchase the property for $121,000 in 1992 plus some improvement expenses - assume $20,000 - total adjusted basis $141,000

assuming you sell the property for $250,000 (that would be your proceeds) and are not qualified for primary residence exemption - your long term (owned more than a year) capital gain will be $250,000 - $141,000 = $109,000 will be taxable.

Yes - that capital gain would be offset by any capital losses you have - either long term or short term - both will be reported on the schedule D - http://www.irs.gov/pub/irs-pdf/f1040sd.pdf

see also worksheet in instructions - http://www.irs.gov/pub/irs-pdf/i1040sd.pdf .

 

please refer to the example in the IRS publication 523 - http://www.irs.gov/pub/irs-pdf/p523.pdf - pages 21-27 how to report taxable gain from sale your home.

 

If you fill properly schedule D - you should see how carried over capital losses offset capital gains you have.

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