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Name is ***** *****
, I bought a beach house back in…

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Name is ***** *****...

Name is ***** *****

Accountant's Assistant: Thanks. Can you give me any more details about your issue?

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.

Submitted: 2 years ago.Category: Tax
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Customer reply replied 2 years ago
Hello
Answered in 23 minutes by:
1/21/2016
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,798
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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.

$243,000

$168,000

$ 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:

https://www.irs.gov/taxtopics/tc409.html

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

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