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Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3470
Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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Name is ***** *****
, I bought a beach house back in

Customer Question

Customer: Name is ***** *****
JA: Thanks. Can you give me any more details about your issue?
Customer: I bought a beach house back in 1998 for 128,000. To pay for the house I increased my permanent home mortgage to pay cash for the house. I did about $40,000 worth of renovations over several years. I sold the house back in July for $255,000, but after closing cost, etc I neted around $243,000. I used $235,000 of this money to pay off my current mortgage on my permanent residence. What kind of taxes, if any, do I owe on the sale of the beach house. NOTE: we stayed in the beach house about 6 months out of the year during the whole time.
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Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Expert:  Tax.appeal.168 replied 1 year ago.

The beach house is considered a 2nd home, therefore the home sale exclusion does not apply to the sale of it.

Cost: $128,000 + qualified improvements $40,000 = $168,000 cost basis. You netted $243,000.



$ 75,000 Gain

As shown above, based on your numbers, you are looking at a $75,000 gain. You will pay 15% on the gain amount.

$75,000 x 15% = $11,250

For more detailed information relating to capital gains, you can refer to the following IRS webpage:

Let me know if I can be of further assistance to you regarding this matter.