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We sold a second home in 2017 for 1,550,000. We are 70 & 73…

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We sold a second...

We sold a second home in 2017 for 1,550,000. We are 70 & 73 yrs old. We purchased the house 15 years ago for $515,000. At closing we had mortgage payoff, legal fees & brokers fees totalling $538,555.50. Plus we have $250000 each exemption. In order not to pay an capital gains taxes what would be the approx amount for renovation? We have done well over $400,000 in renovations over the years. Thanks.

Submitted: 3 months ago.Category: Tax
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3/29/2018
Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,179
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

The exclusion of gain is only allowed for a MAIN home not a second home. Second home refers to a vacation home or other house you own that is not your main home where you live more nights in the year.

Your gain is the difference in the original cost plus improvements less depreciation (if used for rental) and the sale price less cost to sale. The mortgage payoff does not figure into the calculation.

$515k plus the $400k is $915K for cost. The amount over that for sale is gain and taxable.

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

Let me know if you have questions remaining on this subject.

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