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I am selling my home how do I not pay taxes now. california,

Customer Question
I am selling my...

I am selling my home how do I not pay taxes now.

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

california

Accountant's Assistant: Has any paperwork been filed?

I have signed the escrow paperwork but not the closing docs

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

I just need to know if there is a form I can fill out to eliminate Franchise tax withholdings at the time of sell.

Submitted: 7 months ago.Category: Tax
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9/28/2017
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,335
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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Welcome to JustAnswer. My name is ***** ***** I will be able to assist you today.

Under the Internal Revenue Code 121 you may exclude up to $250,000 ($500,000 if filing as married filing jointly) of capital gains from from your taxable income if the home was your primary residence for at least two out of the previous five years.

The state of California follows the federal exclusion.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

"In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015."

If you qualify Use Form 593-C, Real Estate Withholding Certificate, to certify that you qualify for a full or partial withholding exemption

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

"Part IICertifications which fully exempt the sale from withholding: 1.  The property qualifies as the seller’s/transferor’s (or decedent’s, if sold by the decedent’s estate or trust) principal residence within the meaning of Internal Revenue Code (IRC) Section 121. "

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Customer reply replied 7 months ago
I lived in this home until 1986 then started renting it. Does that make a difference?
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

Internal revenue code for exclusion of income requires that you lived in the home as your primary residence for two out of the past five years. Therefore, you would have had to live in the home for at least two years since 2012.

If you do not meet this exclusion then you will be subject to long term capital gains tax, which is considerably lower then ordinary income tax. Depending on your individual tax bracket you may pay at a 0% long term capital gains rate.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

If you have any further questions please let me know.

If you are satisfied with this answer, a positive rating by clicking on three stars or more would be appreciated.

Thank you!

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Customer reply replied 7 months ago
I would have to fill out the 593-C form now and submit with my closing paperwork is this correct?
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

Yes, that is correct. You must submit the 593-C before the closing to your escrow agent. Below is the exact wording in the California Revenue and Taxation Code

"The seller/transferor must submit this form before the close of escrow to prevent withholding on the transaction. "

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Customer reply replied 7 months ago
can I call you later if I need help with the forms. I know there is a charge is the charge extra from what has already been charged?
Customer reply replied 7 months ago
is the charge 42 dollars per question?
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 7 months ago

The price you were offered was for non members. I can keep this question thread open so you may ask all the questions you need to complete the form.

If you would like to speak on the phone, I am able to make a premium service offer for non members with a lowest charge of $5. I am only compensated when you accept the rate the answer or I receive nothing.

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Category: Tax
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