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I'm going through a divorce and I get one home she gets the…

Customer Question
Hi I'm going through...

Hi I'm going through a divorce and I get one home she gets the other I plan on selling my home

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

My house was purchased for 670k we expect it to sell for 1M

Accountant's Assistant: Is there anything else the Accountant should be aware of?

If we have a loan bal of 210 can I deduct what we own on the load from the gain?

Submitted: 4 months ago.Category: Tax
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3/13/2018
Tax Professional: James Daloisio, Tax Attorney replied 4 months ago
James Daloisio
James Daloisio, Tax Attorney
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No.

According to the IRS, "The amount of the proceeds from the sale of your home that you use to pay off the mortgage isn't a factor in figuring your taxable amount for the sale. Instead, the amount you realize on the sale of your home and the adjusted basis of your home are important in determining whether you're subject to tax on the sale." (Amount realized is the amount received from the sale of an asset.)

Calculation of basis for a home sale is a bit complex. You start with your purchase price. Add any capital improvements, i.e., new fence, new driveway, new roof, etc. Don't forget to check your property tax bills and add any direct assessments for sidewalks etc. If you've ever used the home for a business purpose and took depreciation, you must "recapture' the depreciation by subtracting it from your basis. And here's a tidbit that many homeowners are unaware of: the IRS requires you to recapture depreciation "allowed or allowable" on the sale of an asset, so if you were entitled to depreciation but didn't claim it on your tax return, you still have to recapture it when you sell.

Then, take the sale price and deduct the expenses of sale. Real estate broker commissions, closing costs, etc. If you lived in the home as your principal residence for 2 of the previous 5 years you can exclude up to $250,000 of gain. Also you can deduct "fixing up expenses" incurred within 90 days prior to sale.

Hope that answered your question. If so, please don't forget to rate this answer. And you can always return here with follow up questions on this topic at no additional charge. Thank you for using Just Answer.

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