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Old 03-11-2018, 02:20 PM
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Capital Gains Question

Trying to gain some more information in regards to capital gains...

Scenario..

Condo
Bought Condo on 8/18/2014
Sold Condo on 5/4/17.
**Lived in Condo for at least 2 years (I rented it from September 2016 to 4/17). My name the only name on the title. Never received a 1099-S. 70k profit. Sold for 200k.

House
Bought house on 5/20/16
TRYING to sell house after 5/20/18.
**My wife and I's name is on the title. We will make 80k-100k profit off the house.

I'm not very good with tax information but if we sell the house post 5/20/18, is there any reason I couldn't claim the capital gains exemption? Or if I technically used it for the condo, can my wife claim the capital gains exemption on the house? We filed 2017 taxes as married if that makes a difference.

I know there is a rule that you can only use the exemption once every 2 years so I'm just trying to get clarification.

Appreciate any help, Thanks.


Last edited by trev2421 : 03-11-2018 at 03:02 PM. Reason: Updated info.


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Old 03-12-2018, 03:00 AM
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Join Date: Oct 2010
Posts: 5,081
Bought Condo on 8/18/2014
Sold Condo on 5/4/17.
**Lived in Condo for at least 2 years (I rented it from September 2016 to 4/17). My name the only name on the title. Never received a 1099-S. 70k profit. Sold for 200k. ========>Then since you sold the condo at a gain of $70K, you need to recapture the unrecaptured sec 1250 depreciation taxed at 25% as ordinary income ; Unrecaptured Section 1250 gains are only realized when there is a net Section 1231 gain that is not subject to recapture as ordinary income. When you sell your home, federal tax law requires lenders / real estate agents to file a Form 1099-S with the IRS and send you a copy if you do not meet IRS requirements for excluding the taxable gain from the sale on your income tax return. To avoid violating IRS reporting rules, the lender / agent may send you a 1099-S even if you qualify for the taxable gain exclusion. The gross proceeds from the sale of your home appear in Box 2 of the form. If you receive a 1099-S after selling your home, you must report that sale even if the capital gain can be excluded. if yousell your "secondary home" I mean say yiyr cindo is your second home, then(finalized) by Dec 31, 2017, then you must report the sale on your tax return.



House
Bought house on 5/20/16
TRYING to sell house after 5/20/18.
**My wife and I's name is on the title. We will make 80k-100k profit off the house.

I'm not very good with tax information but if we sell the house post 5/20/18, is there any reason I couldn't claim the capital gains exemption? ==========>as you know, to be eligible for this tax benefit, you must have owned and lived in your home for at least 2 of the previous 5 years prior to the sale date. That means you can exlclude capital gains on a rental property that used to be your primary residence, as long as you don't wait too long and miss the deadline.
You do not have to file Form 1099-S if you sell your principal residence for less than $250k, or $500k when preparing your tax return using the "Married Filing Joint Return" status.However, there is a requirement for the seller to provide an "acceptable written assurance" or certification. If there is no certification provided then the 1099-S must be filed.The certification would include information to support the conclusion that the full gain on the sale is excludable from the seller's gross income, and would be obtained from the person responsible for closing the transaction;


Or if I technically used it for the condo, can my wife claim the capital gains exemption on the house? We filed 2017 taxes as married if that makes a difference. ===========>Unless the condo is your primary residence, neither you nor your spouse can claim CG exemption ; Married couples who file jointly are entitled to a $500k exclusion from capital gains so long as either spouse owned the residence and both spouses meet the use testDivorced and separated couples gain big benefits. When a home is occupied by a separated spouse, with the other spouse living elsewhere, if the "in" spouse qualifies for this new tax break, the "out" spouse also qualifies for up to a $250k exemption. If title to any real estate was transferred between the spouses during marriage, or as part of the divorce, then tax law says no gain or loss is recognized.

I know there is a rule that you can only use the exemption once every 2 years so I'm just trying to get clarification. =====>correct as mentioned above. You can only qualify for the home sale exemption from the capital gains tax once every 2 years. To qualify for the home sale capital gains tax exemption, you must have owned and lived in the residence for a total of two out of the last 5 years before the sale. That time does not have to be continuous, which would allow you to live in the house for the first year, rent it for 3 years, then live in it for the 5th year and still qualify. Even if you fail the use test, you can still get a prorated exclusion on your capital gains if you sold your house because of a change in employment, health reasons, or other unforeseen circumstances. For example, if you only lived in a house for a year because of a job change, you would be entitled to a $125k exemption ,half of the $250k exemption you would have received.



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