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I purchased my house in CA and closed escrow/recorded on July

6th, 2012. I want...
I purchased my house in CA and closed escrow/recorded on July 6th, 2012. I want to sell my home and purchase a different one. It has been 14 months in this house... If I put it on market for sale at the beginning of October 2013, and don't close on a new house until after December 30th, 2013, will I be penalized/taxed as capital gains? I purchased for 220k and am selling for 300k.
Thanks!
MAbinante
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Answered in 10 minutes by:
9/25/2013
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,061
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome. My name is XXXXX XXXXX it will be my pleasure to assist you with your tax question today.

 

Capital gains comes into play on the sale of a home as opposed to when you purchase a home. If you purchased your home on July 6, 2012, in order to take advantage of the sale of home exclusion ($250,000 if you are filing single and $500,000 if you are filing married jointly), you will want to schedule the closing for anytime AFTER July 6, 2014. The criteria to qualify for the sale of home exclusion is that you must own and live in the home for 2 of the 5 years immediately preceding the sale. The 2-year time period does not have to be consecutive.

 

The following is the link to IRS Publication 523 which deals with this topic:

 

http://www.irs.gov/pub/irs-pdf/p523.pdf

 

Please let me know if you require further information or clarification on this.

 

Thank you and best regards,

Barb

 

 

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,061
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Customer reply replied 4 years ago

There is a house I'm interested in purchasing and would like to put my house on the market in October. Assuming it sells, how much will I be required to pay since I won't be eligible for the home exclusion? I really don't want to stay here another 9 months... Purchase price 225, selling price 300... I am on the title as married, sole and separate property and my husband filed a quit claim when I purchased the house. We were planning on filing as joint/married this year... total income of about 120,000 for 2013.

Thank you for your follow-up question.

 

The long-term capital gains tax rate is either zero percent, 15%, or 20%, depending on your marginal tax bracket. Since your total income for 2013 will be $120,000, your marginal tax rate would be 25%. Therefore, the capital gains tax rate on the $75,000 net profit would be a maximum of 15%.

 

Please let me know if I can assist you further.

 

Thank you and best regards,

Barb

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Customer reply replied 4 years ago

Thank you so much. That was very helpful. So, if I wait until July 7th, 2014, I won't be taxed on the profit from the sale of the house... Otherwise, I can expect to pay about $11,250 in taxes...


 


Also, are you local to Temecula/Riverside County, and if so, how much do you charge to prepare taxes?

Thank you for your kind words.

 

Unfortunately, I am located in Florida, and JustAnswer site rules prohibit me from preparing your actual taxes. However, please feel free to put "for bkb1956 or Barb" in the subject line of any future questions you might have, and I will be happy to assist you.

 

Thank you and best regards,

Barb

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Just a short note to thank you for the "excellent" rating and very generous bonus. Both are most appreciated.

 

Thanks again and best regards,

Barb

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Barbara
Barbara
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