Have a Tax Question? Ask a Tax Expert
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:
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.
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.
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.