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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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Big Problem We want to sell our NJ home which we bought in

Customer Question

Big Problem: We want to sell our NJ home which we bought in 1974. Obviously, we will make a great capital gain. We live here for at least 6 months every year and live in FL for 6 months also. We claimed residency in FL a few years ago because that held our property taxes to no higher than 3%. I am now told we will have to be paying the govt at least $250,000. We must sell this house because last year our taxes went up by $4,000 and according to last weeks paper this year the Toms River taxes will once again go up. As a couple 74 and 76 with little income coming in, we can't afford this very expensive house. Is there any way of getting around this without having to become residents for 2 more years?
Submitted: 7 years ago.
Category: Tax
Expert:  RD replied 7 years ago.
IS $250K to be paid to GOVT towards taxes on capital gain?

What is your gain on sale of the home?
What is your cost basis? Note that the cost basis will be the original price paid plus any improvements made by you over the years.

Sale price is selling price less the selling expenses paid.

The difference between the above calculated sale price and cost price wil be taxed as capital gain presuming that you did not rent the property in NJ.

The gain on sale of the property(home) is long term capital gain since you held the property for more than a year. This gain will be taxed upto a maximum tax rate of 15% for federal tax purposes.

Edited by RD on 6/1/2010 at 7:56 PM EST