Capital gain tax?

aaaaaaaaJuly 27, 2014

Hi,
I bought my current primary home in 2013 March 1st. Question is---if I sell this house within two years of buying (that is, before March 1st 2015) will there be �Capital gain tax� to be paid from my side? This is in NJ.
Appreciate your help and thanks in advance.
Anna

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sushipup1

It depends on whether or not your home appreciated in value, did you sell for more than you paid (include capital improvements, too).

    Bookmark   July 27, 2014 at 10:37PM
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aaaaaaaa

I finished my basement and installed granite counter tops in kitchen and 2 and 1/2 bathrooms. In addition I did several small home improvements. Cost of my home now will be about 80K more than what I paid for.

    Bookmark   July 27, 2014 at 10:49PM
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aaaaaaaa

I finished my basement and installed granite counter tops in kitchen and 2 and 1/2 bathrooms. In addition I did several small home improvements. Cost of my home now will be about 80K more than what I paid for.

    Bookmark   July 27, 2014 at 10:54PM
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sushipup1

Did you add in the costs of the improvements plus your selling expenses?

    Bookmark   July 27, 2014 at 11:04PM
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tad0422

The basic answer is this:

Assuming this is your main home, you can exclude up to 250k for a single taxpayer (or 500k for married filing joint) assuming you have own the property for more than 2 years and have lived in it claiming it as your main residency.

Since you have live in it less than 2 years you will need to calculate your gain on the sale of your property:

Original Cost of Home (Basis)
Plus: All Realtor, FSBO, closing fees, etc to buy the home that you paid
Plus: All Realtor, FSBO, closing fees, etc to sell the home that you paid
Plus: Cost of all improvements made to the home.
Minus: Total deprecation taken on the home (only if you depreciated your home for a business)

All of this will equal your new basis in the home.

Then take your sale price of your home minus your new basis to find out if you have any gain you will need to report on you Schedule D.

Internal Revenue Service Circular 230 Disclosure:
To ensure compliance with requirements imposed by the Internal Revenue Service, we must inform you that the advice we provide in this correspondence is not intended or written to be used, and cannot be used, by you or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any applicable state or local tax law, or for the purpose of promoting, marketing, or recommending any tax-related matters addressed within to another party. You are not prohibited from sharing this advice with third parties. However, the third parties should seek their own advice based on their particular facts and circumstances from an independent tax advisor.

    Bookmark   July 28, 2014 at 9:56AM
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ncrealestateguy

What Tad Says.

    Bookmark   July 28, 2014 at 1:07PM
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aaaaaaaa

Thanks TadParker. I have not lived for two years yet and yes this is my primary house. But suppose I find a buyer now, can I sign the contract that reflects 'closing date' after two year period of my stay. In this case March 1st 2015.

    Bookmark   July 28, 2014 at 10:35PM
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sushipup1

Only if you don't close until then.

    Bookmark   July 29, 2014 at 12:06AM
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