Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 12-18-2017, 10:04 AM
Junior Member
 
Join Date: Dec 2017
Posts: 2
Long Term Capital Gains question

Hi- Im in north carolina. Im looking at buying a new home in June 2018 however I havent been in my current home for the minimum 2 years. Im expecting to sell for 250k and purchased for 145k. I have several receipts to show improvements and write offs. I would split the proceeds with my partner. Is there anyway i can reduce my long term capital gains or eliminate them? What should I expect as far as a bill? Is there anyway to exclude the sale?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 12-18-2017, 10:44 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,085
Hi- Im in north carolina. Im looking at buying a new home in June 2018 however I havent been in my current home for the minimum 2 years. Im expecting to sell for 250k and purchased for 145k. I have several receipts to show improvements and write offs. I would split the proceeds with my partner. Is there anyway i can reduce my long term capital gains or eliminate them? ========>IT DEPENDS: you generally need to report the sale of your home on your tax return if you received a Form 1099-S or if you do not meet the requirements for excluding the gain on the sale of your home.Basically , aslongas you're single and you realize a $105K( I guess in your case your CG is $52.5K, $105K divided by two, you and your partner) profit on the sale, you don't have to report any of it as taxable income because this is less than the $250K exclusion amount you're entitled to. Of course, the exclusion isn't automatic. However, the IRS imposes a few rules. You must have lived in the home for a minimum of 2 years out of the last 5 years immediately preceding the date of the sale, which typically means you can't use the exclusion on the sale of rental or business property. The 2 years don't have to be consecutive, But since you lived in your home less than 24 months, you may be able to exclude at least a portion of the gain ONLY IF you lived in your house for less than2 years, you can exclude a part of your gain if your work location changed OR If you're selling your house for medical or health reasons, document these reasons with a letter from your physician OR You'll also want to document any unforeseen circumstances that might force you to sell your home before you've lived there the requisite period of time. According to the IRS, an unforeseen circumstance is "the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home.
NOTE: the formula for calculating your gain involves subtracting your adjusted cost basis from your selling price. Youned to start with what you paid for the home,$125K in this case, then add the costs you incurred in the purchase, such as title and escrow fees and real estate agent commissions. Now add the costs of any improvements you made, such as replacing the roof or furnace. You also need to add in the costs of the sale: more title and escrow fees and real estate agent commissions. The resulting number is your ADJUSTED cost basis. So your adj basis of the home exceeds selling price then no capital gain tax. writing off home losses on a personal residence sale is impossible or not allowed. However the tax law allows a deduction for a loss from the sale of a personal residence that has been converted to rental property.

What should I expect as far as a bill?=====>>as said, Loss from the sale of property held for personal use is not deductible. But if you had a loss from the sale of real estate held for personal use for which you received a Form 1099-S, you need to report the transaction on Form 8949 and Sch D of 1040, as applicable, even though the loss is not deductible. So you don?t need to report the sale of your main home on your return unless you need to report your gain as taxable even though some or all of it is eligible for exclusion; You received Form 1099-S. If so, you must report the sale even if you have no taxable gain to report


Is there anyway to exclude the sale?==>as mentioned above;



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 12-19-2017, 02:25 PM
Junior Member
 
Join Date: Dec 2017
Posts: 2
Thanks for the input! So I can exclude a certain number of months that I lived in the home between the 1 year and two year window?

Also, is the tax rate ONLY applicable to the capital gain portion? I.e my regular income is taxed at the tax bracket that it falls within, and the capital gain is taxed at the long-term capital gain rate, correct?

Also, are there state taxes on long term capital gains that I should consider?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 12-20-2017, 03:59 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,085
Quote:
Originally Posted by fdonna692 View Post
Thanks for the input! So I can exclude a certain number of months that I lived in the home between the 1 year and two year window?

Also, is the tax rate ONLY applicable to the capital gain portion? I.e my regular income is taxed at the tax bracket that it falls within, and the capital gain is taxed at the long-term capital gain rate, correct?

Also, are there state taxes on long term capital gains that I should consider?
Thanks for the input! So I can exclude a certain number of months that I lived in the home between the 1 year and two year window?=====>No. As said it depends plz re read what I wrote.

Also, is the tax rate ONLY applicable to the capital gain portion? I.e my regular income is taxed at the tax bracket that it falls within, and the capital gain is taxed at the long-term capital gain rate, correct?====>you are correct basically you anyway need to report your lTCG on your 1040 line 13. Sowhen you come up with a gain, the tax paperwork continues.Depending on your answers to the various Sch D /f8949 questions, you?re directed to the separate Qualified Dividends and Capital Gain Tax work sheet or the Sch D Tax work sheet, which are found in the Form 1040 instructions booklet. Basically, these work sheets take you through calculations of your various types of gain income and figure the appropriate taxation level for each.You need to complete your Form 1040 through line 43. I mean the Qualified Dividends and Capital Gain Tax Worksheet on Sch D of 1040 determines tax on yur LTCG based on your taxable income.


Also, are there state taxes on long term capital gains that I should consider?========>No . as I said, you need to check the Qualified Dividends and Capital Gain Tax Worksheet on Sch D.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Long Term Capital Gains on Stock Investment stockinvestor Capital Gains 1 02-21-2017 11:46 PM
0% Long Term Capital Gains accident_prone4life Capital Gains 1 12-02-2014 05:14 AM
short term capital gains question asdbnm For 2014 1 12-01-2014 02:51 AM
Accidently misclassified a capital gains transaction as short term rather than long term janelee Capital Gains 1 04-17-2014 06:50 AM
Long term capital gains rate for active trading LLC lukedog Limited Liability Company 1 09-22-2012 04:52 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning