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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3014
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I lived in my condo that I bought after separating from my

Customer Question

Hi, Christopher. I lived in my condo that I bought after separating from my husband in April 2012. I filed for divorce around mid 2013 & it finalized in January 2014. I told my condo in August of 2013 & bought my house in September 2013 because it was cheaper to have the little tiny house & less of a financial burden. Unfortunately, my friend who did my taxes didn't claim it properly & I recieved a letter from the IRS asking what that income from the selling of the condo is for. I bought my condo for around $245K(?) & sold it for $325K. Whatever money I made on it, went straight into the house. What can I do to not be penalized?
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.
Welcome to Just Answer. My name is ***** ***** it will be my pleasure to assist you with your tax question today.
If you purchased your condo in April of 2012 and then sold in in August of 2013, you would not qualify for the sale of home exclusion which allows up to $250,000 of the gain from the sale of your home to be excluded if you file single if you own and live in the home for 2 of the 5 years immediately preceding the sale.
You pay capital gains on the difference between your basis and the sales price. However, if you made any improvements to the condo, you would increase your basis by that amount. Also, your sales price can be reduced by real estate commission, closing costs, etc.
In other words, instead of paying paying gains tax on the entire $80,000 ($325,000 minus $245,000), you may find the amount to be less.
The following link contains information regarding the 2013 capital gains tax rates:
http://www.marottaonmoney.com/2013-capital-gains-tax-table/
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb