Capital Gains On Selling House

[questions]

Due to marital problems, I left my principal residence to resolve some differences with my spouse. I entered into a lease option agreement with some people interested in purchasing my home. My marriage ended so I bought another house. The people flaked out on the lease option, so I sold the other house about a year ago.

I have an opportunity to take a job with my company out of the area, but have been told I can't sell my current residence until two years have gone by since the last sale. Am I just stuck, or what?

My accountant says I will be penalized about 18% on the proceeds to capital gains. Can that be true? I have lived in my current residence for over two years.

[Broken Arrow]

Re: Capital Gains On Selling House

Interesting! I have a similar question.

My ex and I sold our house recently and netted about 20k. We split the proceeds equally between us (~10k each). I assume that I'll be paying taxes on that as well, right? I've never sold a house before, so I don't know for sure.

Please advise.

[creditcardfree]

Re: Capital Gains On Selling House

Capital Gains are tax free if you have lived in your principal residence for 24 months out of the previous 5 years. They are tax free up to $250,000 for singles and $500,000 for married couples.

In order to figure capital gains, you must add the cost of home improvements to the basis or original purchase price. The difference between this figure and the sales price is your capital gain.

I believe you can only get your capital gains tax free (up to the limits) once every two years. I'm sorry that I don't know what the tax rate is on that...10 -15% federal I think. So maybe there is a state tax on it as well.

Broken Arrow- I think you will be eligible for the capital gain exemption because you definitely only have one sale in the last two years. I'm correct on that right?

As I have never sold a house either take my advice lightly. I would look on the irs website or check out bobbruss.com. The last site offers guides on numerous real estate questions, including the capital gains issue for about $5. I'm not endorsing him...I've just read his columns in our local newspaper.

Anyone else care to comment?

[sweeps]

Re: Capital Gains On Selling House

Relevant article

[LuxLiving]

Re: Capital Gains On Selling House

another relevant article

http://www.clientadvisor.biz/nl/newdesign/client_advisor_two.htm

[greedy4chips]

Re: Capital Gains On Selling House

My accountant says I will be penalized about 18% on the proceeds to capital gains. Can that be true? I have lived in my current residence for over two years.

Your accountant is wrong unless they did not know about your moving for a new job (with the same company) in which case they should have asked to be clear of the reason why you were selling, just in case you could avoid the 18% tax.

A fellow coworker did a very similar 2nd home sale when he transferred to another terminal for the trucking company I used to work for. He was also under the impression he had to pay the capital gains tax.

[JBinKC]

Re: Capital Gains On Selling House

My thoughts: It is obvious either somewhere you fail on the residency test or your portion of the gain exceeded 250K. Perhaps you lived apart for a portion of the time is the reason why the accountant came up his answer. Since the entire situation isn't laid out here in print I cannot say he is wrong quite yet.

[Broken Arrow]

Re: Capital Gains On Selling House

Terrific!

We've lived there for 5 years and the house was definitely below 250k

Thanks everyone!

[jmjj215]

Re: Capital Gains On Selling House

The residency requirement can be waived if you're moving because of a job I believe.