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Does Anyone Know What The Tax Penalty Is For Selling Your Home Prior To Living In It Two Years?

I wаѕ јυѕt tοƖԁ bу a friend thаt thеrе mау bе a large amount οf taxes thаt I wіƖƖ owe fοr selling mу home prior tο living іn іt two years. Wе аrе 4 months shy οf thе two year mаrk. Cаn anyone tеƖƖ mе hοw thаt works οr whеrе I саn read info οn іt?

7 Responses to “Does Anyone Know What The Tax Penalty Is For Selling Your Home Prior To Living In It Two Years?”

  1. Any profit you make will be counted as income unless you buy another house within a set period of time.

  2. http://www.irs.gov

  3. It’s called Capital Gains Tax. You’d have to pay it no matter what but it might be substantial versus the appreciation of the home value within the first two years.

  4. You may be able to avoid paying any tax at all. If you are moving due a change in employment, change in health, or unforeseen circumstance, you are eligible for a reduced exclusion.
    Since the exclusion for a married couple is $500,000 (of GAIN, not sales price) if married and filing a joint return, if you meet one of the criteria you may be able to exclude $416,666 of gain.
    You should talk to a CPA about this.

  5. you will pay captial gains tax of approx 15%. be sure to maximize your cost basis by adding your purchase price, and all expenses paid for improvements. have your tax advisor plan it out for you.

  6. There are certain exclusions (Moving because of work, hardship, etc.. that may be allowed). The tax is ONLY on the gain you made on the home not the entire thing. I recommend finding a local tax preparer and speaking to them about it.

  7. There are more questions that need to be asked to answer this question. It’s not how long you lived in the house, it is how long since you last sold a personal residence. If neither you nor your husband has taken the personal residence exclusion in the last two tax years, you can take the exclusion, even though you didn’t live in the home for two years.
    However, if your husband sold a home and you have not, (or vise versa) you are eligible to take an exclusion of $250,000.
    If you have both taken the exclusion, capital gains tax will apply. You are only taxed on the gain of the sale which is figured as: (original price paid + any costs to update and/or cost of the sale) – selling price of the home. If there is a gain, that amount is placed on a schedule D and figured at capital gains rates, however if there is a loss, it will reduce your adjusted gross income.
    For more information go to http://www.irs.gov and search for publication 523. That will give you the rules regarding the sell and information if you have any additional questions.

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