Sold first home - Do you pay capital gains tax?

[mathjak107]

to be honest i think most people would just forget the extra days income and call it a day.

yes you are supposed to report the 17 days as income but i highly doubt anyone would get involved with all the paper work.

[Mike From NIU]

Originally Posted by mathjak107

to be honest i think most people would just forget the extra days income and call it a day.

yes you are supposed to report the 17 days as income but i highly doubt anyone would get involved with all the paper work.

I would agree with Mathjak on this.

However, how much rent did you receive for 17 days? I'm assuming not thousands of dollars. So, also look at it from an IRS view. Unless you have a number of suspect deductions or aggressive tax positions, they are unlikely to notice or really care if someone fails to report $800-1000 of rental income. Because if they pursue that, they also have to process depreciation and recapture forms, which costs time and $$.

[joe moving]

What is the federal governments opinion on when you began to live in a home as your primary residence?

I owned 2 homes for a while. Technically we've lived here full time for 2 years but 2012 state tax returns say slightly less. It took a few months to get state taxes all moved over. This sale will probably come down to those couple months difference.

If it turns out that we need to pay, is this chart a good guideline?
https://www.fidelity.com/viewpoints/...axpayers-guide

This suggests 15% for long term gains for those making 72k-450k. Would that be on the difference between purchase and sale price or can we deduct the realtor fees and/or any other costs involved in owning the home? We're not looking at a lot of gain, about 13k gross but would obviously like to minimize what we have to pay. I don't think a 1099-S will be involved (home is < 250k).

[jw2]

Originally Posted by joe moving

...
This suggests 15% for long term gains for those making 72k-450k. Would that be on the difference between purchase and sale price or can we deduct the realtor fees and/or any other costs involved in owning the home? We're not looking at a lot of gain, about 13k gross but would obviously like to minimize what we have to pay. I don't think a 1099-S will be involved (home is < 250k).

Technically, like any capital gain, it is the difference between sales proceeds and cost basis.

The cost basis is typically your purchase price plus any improvements. If it was used for a commercial purpose, such as a rental, the depreciation would be subtracted from your basis.

Sales proceeds is sales price minus any costs you incurred by selling including real estate commissions but all other escrow costs as well.

You are right in that the limit for long term (over one year) is 15% in your bracket. One exception is, any depreciation recapture is capped at 25% instead. If you never used it as a rental, ignore all the depreciation comments

[joe moving]

Thanks, sounds like I can add a bunch of things to up the basis that I didn't realize and get it closer to the re-sale price . We shouldn't pay much. It was our primary residence.


Home Purchase Costs You Can't Deduct or Add to Tax Basis | Nolo.com


Home improvements that can cut capital gains taxes (Page 1 of 2)