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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15267
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hi... I got married a couple years ago and sold my house on

Resolved Question:

Hi... I got married a couple years ago and sold my house on a land contract here in Wisconsin. I sold it for $50,000. When I bought it I paid $42000. I made numerous improvements. My improvements came to about $20,000. My question is do I have to pay income tax, or any other tax on that payment I received each month? originally I was told that if I did not make a profit on the home, there would be no taxes due. Can you help?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

It is correct - you do not have to pay tax on the sale of the house, if there is no gain.

Megan C :

However, if you sold on a land contract and receive interest payments, you must pay ordinary income tax on the interest you receive from the sale of your home.

Megan C :

Even if you did have a gain (which you didn't ) you wouldn't owe tax on the gain unless it was over $250,000 if you lived in the house 2 out of 5 years

Megan C :

So, you're in good position not to owe tax.

Customer:

What part would be interest it there wasn't any profit? Oh... you mean the 7.5% I'm charging. Ok, the little light in my head just popped on! Thanks

Megan C :

Yes, the 7.5% interest

Customer:

Ok. Thanks a ton.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15267
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, Jim for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.

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