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;