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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2939
Experience:  IRS licensed Enrolled Agent and tax instructor
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Do we have to pay capitol gain on a house we sold in

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Do we have to pay capitol gain on a house we sold in 2016,that was out of our state of residence.. We are both over 65 and had the house for 8 years. When we bought it ,it was our primary residence.
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: We sold that house in March of 2016 and then purchased another home in April of 2016. This home is in our home state.

Hi. My name is ***** ***** I will be happy to help you.

It depends on the capital gains and if you if you qualify for the principle residence capital gains exclusion.

You will figure out your capital gains as followed:

Sales price

- purchase price

- improvements

- expenses of sale

= capital gains.

If the house was your principle residence for at least 2 out of 5 years (24 months between March 2011 and March 2016), you can exclude up to 250K (500K if filing jointly) from your capital gains.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

Customer: replied 5 months ago.
The house was in Arizona...which is not our home state. At the time we did not own a house in our home state. We never became residents of Arizona,but only lived part time there for 8 years.

Your state of residence or if you owned another property or not is irrelevant. If you sell a property for more than your basis (purchase price, improvements, other expenses associated with it) you have capital gains. There's a special exclusion for a property that was your principle residence for at least 2 years out of 5 years prior the sale.

If you did not live in AZ and the house is in AZ, it could not be your primary residence.

You said it was your primary residence when you bought it. When did you move out?

Customer: replied 5 months ago.
We lived in the house in Arizona in the winter,and in our home state in the summer. At that time,we lived in a camper in our home state. The house in Arizona was the only house we owned,at the time. We were really just 'snowbirds' in Arizona. So we might have to pay capitol gain on the profit we made on the house in Arizona? I think we paid $115,000 and sold it for under $130,000.

If you bought it for 115K and sold it for 130K, after deducting some improvements and selling expenses, including RE commission and closing costs, you will probably just break even or have little capital gains to report. Also, depending on your income, if you are in 10 or 15% tax bracket, your capital gains rate will be 0. In the worst case scenario you will pay 15% tax on the capital gains.

Customer: replied 5 months ago.
Thank you very much. Your responses were very helpful. Happy New Year.

You're welcome and Happy New also to you.

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