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House is sold in the last couple of months. It was a primary

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House is sold in the...
House is sold in the last couple of months. It was a primary personal residence for a single person never married during time house was owned. Sold for 280K purchased for 211K nine years earlier. After realtor fees and help with buyers closing costs ended up with approximately 257K. Lived in it two of the last five years. Would like to down size looking at purchasing for cash a house for 120k. Looks like gain will not be taxed, what things need to be considered at this time?
Submitted: 1 year ago.Category: Tax
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Answered in 1 minute by:
7/7/2016
Tax Professional: Richard, Tax Attorney replied 1 year ago
Richard
Richard, Tax Attorney
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Customer reply replied 1 year ago
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Tax Professional: Richard, Tax Attorney replied 1 year ago

You are correct. There would be no tax on the sale since this would qualify as your principal residence. Since this has been your principal residence, under Section 121 of the Internal Revenue Code you can exclude up to $250,000 of gain from the sale of your principal residence. Thus, since your gain did not exceed $250,000, all your gain would be excluded from income under Section 121. This is a link to that Code section: https://www.law.cornell.edu/uscode/text/26/121. But, you will need to report the sale on Schedule D and Form 8949 to be attached to the Form 1040 because unless you report the sale, the IRS presumes the basis is zero and treats the entire proceeds as gain.

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Customer reply replied 1 year ago
His advice good. However it would have been better if your system would allow a follow on question, in writing, instead of only a phone call option.
Tax Professional: Richard, Tax Attorney replied 1 year ago

I'll be happy to help you with a follow up on this thread.

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