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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12009
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I sold a four family home, do I have to pay capital gains

Customer Question

I sold a four family home, do I have to pay capital gains tax.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from mercer University’s Stetson School of Business and Economics, as well as CFP® and CRPS designations.

...

That will depend on whether it (or any part of it) is considered as your primary residence.

Expert:  Lane replied 1 year ago.

The IRS test for primary residence is having lived in the home for any 24 months out of the last five years before the sale.

...

If that were the case, then up to 250,000 of gain is excluded (500,000 for those married filing jointly)

...

Customer: replied 1 year ago.
is primary resident for 15yrs
Expert:  Lane replied 1 year ago.

Then up to 250,000 of the gain (Gain is sales price MINUS basis) ... basis being purchase price plus improvements is excludable for a single filer ... again, 500,000 for joint filers

Expert:  Lane replied 1 year ago.

But now, your situation falls partly within that rule , and you may have to run the numbers differently than most people that sell their homes, if the home isn't a single family home or if some of the building is rental units.

Expert:  Lane replied 1 year ago.

If THAT's the case, then you’ll have to allocate a percentage of the property as a whole to your primary residence and then determine whether you owe taxes on the sale that part of the property.

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Then did not have a profit of more than $250,000 (500,000 for couples) on the sale the portion that was your home, you should owe no federal income taxes on that part of the sale.

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But WILL have capital gains on the portion of the property that does not qualify because those units (portions of the house) were NOT your primary residence.

Expert:  Lane replied 1 year ago.

Questions at this point?

Expert:  Lane replied 1 year ago.

Hi,

I’m just checking back in to see how things are going.

Did my answer help?

Let me know…

Thanks

Lane