Anyone know when capital gains taxes apply on home sales?

[Double Trouble]

flot, the proration only occurs if you can qualify for the hardship exemption, otherwise the proration does not apply and you have to pay capital gains tax on the profit (minus the cost of capital improvements to the house).

Given what the housing market has done over the past couple of years, that 'profit' amount could be fairly substantial.

 

[dderidex]

Originally posted by: tagej
dderidex, you can avoid having to pay capital gains taxes on the sale of your home if you qualify for the IRS hardship exception. The exception covers medical costs, divorce, or job transfers over 50 miles. There might be other conditions you might meet for the exception, but I'm guessing if you take a job > 50 miles away, you could sell your home without incurring capital gains taxes.

Good luck!

Could you point me to a section of the tax codes I could find the details on this in?

Originally posted by: d3n
As far as salary I would find the employment salary statistics for the area you are looking in and take the stats with you to your job negotiations after they get past the initial phase. An employer won?t be able to fault you for backing up your claim for a higher salary. Especially if they know they want to actually have a quality person fill the job. Good luck.

That would be a good idea, but where would I look?

I'm living in a tourist town with a population (Bend and the rest of the county around it) of around 100,000. The town itself is only 60,000 - it really doesn't show up on any of the 'city area salary stats' that tend to be posted that *I've* seen.

 

[DrPizza]

Originally posted by: flot
Someone correct me if I'm wrong, but I BELIEVE -

You can only do this once every 2 years, that is fact.

However, if you stay in your place less than two years, the amount of profit that you can exclude from cap gains is prorated. IE if you only lived there 1 year, the first $250k of profit would be untaxed.

So, if you already used this trick when you sold your last house, out of luck. But if this, for instance, was your first home - you'd be fine. ?


PS: It isn't the SALE of the house that is entirely taxable, it's your profit on the house... which may or may not be such a big deal..? If you've only lived there a year, how much has it appreciated?

same thing I was thinking..

 

[EagleKeeper]

If single - $250K Profit is exempt.

If married filing jointly - $500K Profit is exempt.

You must meet the residency requirements for the exemptions to be in effect.

 

[dderidex]

Originally posted by: EagleKeeper
If single - $250K Profit is exempt.

If married filing jointly - $500K Profit is exempt.

You must meet the residency requirements for the exemptions to be in effect.

Married filing jointly, and it'd be under $250k total sale price to begin with.

However, it's the "residency requirements" that's the question. I know it's 2 of the previous 5 years normally...which we wouldn't meet...hence the question.

What exceptions ARE there to this requirement?

 

[Orsorum]

Originally posted by: dderidex

Originally posted by: tagej
dderidex, you can avoid having to pay capital gains taxes on the sale of your home if you qualify for the IRS hardship exception. The exception covers medical costs, divorce, or job transfers over 50 miles. There might be other conditions you might meet for the exception, but I'm guessing if you take a job > 50 miles away, you could sell your home without incurring capital gains taxes.

Good luck!

Could you point me to a section of the tax codes I could find the details on this in?

§121(c) (you find the conditions in §121(c)(2)(B))