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Question Regarding Taxes and sale of home

salzosalzo Member Posts: 6,396 ✭✭
edited March 2003 in General Discussion
We recently sold our home, and bought a new one. The new house has some work to be done, so when we sold the old house, we kept $20,000 from the sale, and put the remaining amount from the sale to the new home. The rest we mortgaged. So my question is, do we have to pay taxes on the $20,000 we kept from the sale of our home? We kept the $20,000 to pay for home improvements on the new home.

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-Edgar Derby

Comments

  • RusticwaterRusticwater Member Posts: 223 ✭✭✭
    edited November -1
    Salzo,

    You really should consult with a local tax professional regarding your question. I can just envision you explaining to the IRS agent during your audit "But they said on Gunbroker that I could do it!" [8D]

    lobster-clear.gifClose to God, far away from everyone else.
    My wife...yes. My dog...maybe. My gun...NEVER!
    greeting
  • select-fireselect-fire Member Posts: 69,453 ✭✭✭✭
    edited November -1
    Depends.. Was the 20k on the sale capital gains. ( the difference of what you paid for the house and the sale price). Account for all repairs that you did on the home you sold and subtract them from the sales price
    Example Home was purchased for 75,000
    Home was sold for 89,000 five years later
    There is a 14,000 capital gain on the sale, But you need to subtract expenses and repairs for the 5 year period including realtors fee for the sale. Say you have a net capital gain of 2000 that is what you would pay taxes on the following year.
  • AlpineAlpine Member Posts: 15,041 ✭✭✭✭
    edited November -1
    As far as the sale of your main house, as long as the procceds from the first house go towards your next house, there is no capital gains. As long as the new house is more expensive as your old house, or any extra moneys goes to improvements. There are numerous areas where capitol gains can be dodged. A tax advisor can lead you through this.

    "If you ain't got pictures, I wasn't there."
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  • WIN 1894WIN 1894 Member Posts: 149 ✭✭✭
    edited November -1
    If you have owned and lived in your home for 2-5yrs and are single there is no capital gains up to $250,000. You pay gains only on the amount over $250,000. If you are married you have a $500,000 limit. You would pay only on the amount above these limits. If you are within these limits I recommend checking with your tax individual. This is a Federal Law and state laws vary. Good Luck
  • familyguyfamilyguy Member Posts: 1,349 ✭✭✭✭✭
    edited November -1
    Ditto what PFD said. I sold my house a couple of years ago. If it was your PRIMARY residence for 2 of the past five years (doesn't have to be consecutive!) you are exempt up to $250K. Can you believe that Klinton made that change?

    Got a new gun for my ex-wife.....pretty good trade, huh?
  • WIN 1894WIN 1894 Member Posts: 149 ✭✭✭
    edited November -1
    familyguy: If I remember correctly this was a bill that was generated
    by the Republican Senator from Texas (I think P.Gramm). Anyway it went thru and the Kluncker signed it. But anyway it sure helps the little family out.
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