Thinking about selling my house

[misle]

I know that if you sell your house after living there for 2 years you can profit up to $250k without paying taxes. But I can't find anything on if you live there less than 2 years.

Reason for the move: Changed jobs and I'm getting tired of the 40 minutes drive one way.

It was a foreclosure that I fixed up so I expect a profit of about $10-15k.

 

[mugs]

I think you have to pay taxes on the full profit since it's under 2 years. And as I understand it, you can add the cost of any home IMPROVEMENT to the cost of the house to offset your gains, but you can't add the cost of repairs.

(I am NOT an accountant)

 

[Aberforth]

I have a house in SC but I don't live there so I rented it out to tourists and frequent travelers, will probably sell it in 3-4 years. btw real estate rates aren't so good these days, so you might want to wait for a year or two.

 

[Ns1]

no homeowner exclusion for you.

did you make any household improvements? (roofing, asphalt, w/e is permanent)

Hope you got receipts

 

[Jumpem]

You have to pay taxes for selling a house? God, I hate this country.

 

[EagleKeeper]

Taxes will be paid at the Capital gain rate for any profit if living there less than 2 years.

Closing date to closing date.

Is the 40 mintue commute worth ~$3K?

 

[EagleKeeper]

Originally posted by: Jumpem
You have to pay taxes for selling a house? God, I hate this country.

You pay taxes on profit if you live in the location for less than a specified time frame.
It is treated as an investment vs housing.

 

[ICRS]

Did you get your home through the Missouri Housing Development Commision?

 

[mugs]

Originally posted by: Jumpem
You have to pay taxes for selling a house? God, I hate this country.

The exclusions allow most people to never pay tax on a house sale. It mostly hits people who buy houses as an investment (not as their primary residence), in which case why shouldn't it be treated the same as any other investment?

 

[Injury]

Maybe you should calculate how much your taxes will be vs. how much you are spending in gas. I'm going to guess that unless you're driving a gas hog, you'll benefit more by just sticking it out for a little bit unless you really don't care to dip in to the profits here.

Besides, in this market it's possible that it could take 8 more months to sell anyway.

 

[thomsbrain]

Originally posted by: Common Courtesy
Taxes will be paid at the Capital gain rate for any profit if living there less than 2 years.

Closing date to closing date.

That's my understanding, too.

Honestly, though, you want to move after 16 months because your commute is 40 minutes? That's low by a lot of people's standards. My own commute ranges from 40 minutes to 60+, and I don't mind it at all.

Don't forget you will have to pay closing costs on your new loan and realtor fees as the seller. I'd be willing to bet you don't make a penny on the house, and maybe even lose a little money. And that's assuming you can find a buyer in this market, and assuming you can get your asking price, and those are HUGE "ifs."

This is just a bad idea all around. Wait a couple years for the market to gel, and you'll probably find the process a lot easier and you won't have to worry about capital gains anymore.

 

[geno]

Originally posted by: Jumpem
You have to pay taxes for selling a house? God, I hate this country.

Capital gains.

If you make money on a house, you're damn right you're paying taxes. I don't love the idea, but there aren't many ways you can legally make money and NOT be taxed. It also keeps people from constantly flipping houses which, in thoery, keeps the housing market a little more reasonable.

 

[misle]

Originally posted by: Common Courtesy
Taxes will be paid at the Capital gain rate for any profit if living there less than 2 years.

Closing date to closing date.

Is the 40 mintue commute worth ~$3K?

Well, that blows.

30 mile (actually 40, but I'll leave 10 for the new commute) daily roundtrip for 8 months = ~4,800 miles = ~171 gallons of gas = ~$600
60 minute (actually 70-80, but again, new commute) roundtrip over 8 months = 160 hrs. So, is 160 hrs worth $2,400?

I'll have to think about it.

 

[misle]

Originally posted by: thomsbrain

Honestly, though, you want to move after 16 months because your commute is 40 minutes? That's low by a lot of people's standards. My own commute ranges from 40 minutes to 60+, and I don't mind it at all.

Don't forget you will have to pay closing costs on your new loan and realtor fees as the seller. I'd be willing to bet you don't make a penny on the house, and maybe even lose a little money. And that's assuming you can find a buyer in this market, and assuming you can get your asking price, and those are HUGE "ifs."

Any commute over 20 minutes is very annoying. When I bought my house, it was 4.6 miles from work, took 10-12 minutes. I could drive home for lunch. It was great.

"Don't forget you will have to pay closing costs on your new loan"
No new loan. I'm going to get a small, cheap apartment and save a ton of money and pay off some debts (debts mainly from fixing up my house). I'm pretty damn tired of living paycheck to paycheck.

Plus, I hope to transfer to a different city in a year or so.

Houses have been selling in my neighborhood. It is a nice subdivision with a lot starter houses for young families.

 

[dullard]

I don't think this is much of a big deal.

1) If you live there for 2 years, then the first $250,000 in profit is tax free. You can just wait it out a bit. Heck, with the current housing market, it'll probably will take you to the 2 year mark just to sell it. You'll have to check up on this, but I think the tax is prorated for the amount of time you are there IF you change jobs which you did. Thus, you don't even have to spend the full 2 years there.

2) Even if you did pay taxes, the tax rate is small. At worst it would be 15% tax rate of $15k; that comes out to $15k * 15% = $2250. If you are in the lowest 2 tax brackets, the capital gains are 5%, for a tax of $15k * 5% = $750. That is not THAT much tax.

3) Remember home improvement costs are subtracted from the profit. So if you have receipts for those repairs that you mentioned above, then you probably can drop that $15k significantly. If you spent more than $15k to repair the house or other related costs, you wouldn't owe a single penny in tax.

4) Other expenses are also subtracted. For example, the ~6% realtor fee is subtracted. This reduces your $15k "profit" even further.

 

[mugs]

Originally posted by: misle

Originally posted by: Common Courtesy
Taxes will be paid at the Capital gain rate for any profit if living there less than 2 years.

Closing date to closing date.

Is the 40 mintue commute worth ~$3K?

Well, that blows.

30 mile (actually 40, but I'll leave 10 for the new commute) daily roundtrip for 8 months = ~4,800 miles = ~171 gallons of gas = ~$600
60 minute (actually 70-80, but again, new commute) roundtrip over 8 months = 160 hrs. So, is 160 hrs worth $2,400?

I'll have to think about it.

FWIW, I've found that audiobooks make a long commute go by much faster. Music just doesn't do it for me.

 

[misle]

Originally posted by: dullard
I don't think this is much of a big deal.

1) If you live there for 2 years, then the first $250,000 in profit is tax free. You can just wait it out a bit. Heck, with the current housing market, it'll probably will take you to the 2 year mark just to sell it.

2) Even if you did pay taxes, the tax rate is small. At worst it would be 15% tax rate of $15k; that comes out to $15k * 15% = $2250. If you are in the lowest 2 tax brackets, the capital gains are 5%, for a tax of $15k * 5% = $750. That is not THAT much tax.

3) Remember home improvement costs are subtracted from the profit. So if you have receipts for those repairs that you mentioned above, then you probably can drop that $15k significantly. If you spent more than $15k to repair the house or other related costs, you wouldn't owe a single penny in tax.

4) You'll have to check up on this, but I think the tax is prorated for the amount of time you are there IF you change jobs which you did. Thus, you don't even have to spend the full 2 years there.

Thanks for the info.

I just checked on #4. The new job has to be 50 miles away from the last job. Mines not.

I do have a big stack of receipts plus my father installed hardwood floors for me, and that's his profession, so I could get a receipt from him...

Again, thanks for the information, and yes, Audiobooks are great for commuting. :thumbsup:

 

[Jumpem]

Originally posted by: Common Courtesy
You pay taxes on profit if you live in the location for less than a specified time frame.
It is treated as an investment vs housing.

I don't think we should be taxed on investments either. Aside from a 401k, the money you use to invest has already been taxed once as income.

 

[txrandom]

Originally posted by: Jumpem

Originally posted by: Common Courtesy
You pay taxes on profit if you live in the location for less than a specified time frame.
It is treated as an investment vs housing.

I don't think we should be taxed on investments either. Aside from a 401k, the money you use to invest has already been taxed once as income.

You aren't taxed on income twice. If you make profits, you are taxed on that profit. If you lose money, you can reduce your taxable income. If you fall even, nothing happens.

 

[Injury]

Originally posted by: Jumpem

Originally posted by: Common Courtesy
You pay taxes on profit if you live in the location for less than a specified time frame.
It is treated as an investment vs housing.

I don't think we should be taxed on investments either. Aside from a 401k, the money you use to invest has already been taxed once as income.

Perhaps you should take the issue up with your local congressperson.

 

[Jumpem]

Originally posted by: Injury
Perhaps you should take the issue up with your local congressperson.

I'm in NY. All of my congresspeople are liberal idiots.

 

[Itchrelief]

Originally posted by: Jumpem

Originally posted by: Common Courtesy
You pay taxes on profit if you live in the location for less than a specified time frame.
It is treated as an investment vs housing.

I don't think we should be taxed on investments either. Aside from a 401k, the money you use to invest has already been taxed once as income.

If you think of it that way, that income was already taxed when your employer took in revenue. You couldn't tax anything with that viewpoint.