The Capital Gains Blog

Posts Tagged ‘home’

Question: Do I owe Capital Gains Tax on the sale of the house my brother and I inherited when my mom died in Feb. 09?

She bought the house for $110k in 2006. After she died, the house appraised for $110k, and we sold it for $110k in July 09. I paid about $3400 in legal fees, closing costs, etc. After payment of the mortgage balance, my brother and I each cleared about $4200.

Answer: You must report the sale, but you do not have to pay anything unless you fail to report it properly.

If you wish to obey the law and pay nothing, then you must report the sale on Schedule D and enter the correct basis and proceeds so that there are no gains. You then pay nothing.

However, if you break the law by not reporting it, then the IRS will falsely assume that it was bought for nothing and that the basis is $0, and will charge you capital gains tax on the entire $110,000.

Angle Announces 2009 Fourth Quarter and Year-End Results

CALGARY, ALBERTA–(Marketwire – March 22, 2010) – Angle Energy Inc. (“Angle” or the “Company”) (TSX:NGL) is pleased to announce its financial and operating results for the three months and year ended December 31, 2009. /

Home For Sale Lynnwood WA $2499000 Shari Song

Question: what is the percentage charged on capital gains like sale of property like house?

Answer: If it is a short term capital gain, you would have to pay tax on normal rate as per your slab of income tax.
If it is a long term capital gain, you can pay 10% without indexation and 20% with indexation.

Investors Sell Ahead Of Possible UK Tax Hike

Property consultants have reported a significant rise in the number of second home-owners and long term investors in central London putting their properties up for sale as speculation grows that the government will increase the Capital Gains Tax rate in the 2010 budget, due to be announced in the coming weeks.

Question: What starts and ends the two year period before tax free capital gains on sale of home?

Answer: To exclude the gain from tax you must both own AND live in the home for two of the five years prior to the sale date. The closing date on the sale matters. The closing date when you bought it may or may not matter. The date or dates that you moved in and out of the house will also matter as the two years do not need to be a continuous period of time but may have breaks in between as long as they total a full two years in the five year period immediately prior to the sale.

HOME PAGE

More private banks on the cards The Finance Minister has heralded the third phase of the opening up of the private sector banking space. Mr Pranab Mukherjee announced that the Reserve Bank of India is considering giving some additional banking licences to private …

Question: We just sold our moumtain home and was wondering about Capital Gains Tax.?

We have homestead exemption and our cars are registered in the same county. However, we work and live part-time in Woodstock. Due to a loss of job and lack of sales in the Real Estate market we financiallly had to sell. Do we have to pay capital gains tax?
We live in Georgia.

Answer: And you asked this in the UK section because?

If your jobs are in Woodstock, your tax home may be Woodstock and your “part-time living” in Woodstock may be your primary residence. (This is a facts and circumstances question.)

1. Figure out gain. Sales price – cost basis – selling expenses = gain.

If you don’t qualify for sale of home (you probably will), the rules work this way:

2. Figure out holding period. If you owned it at least a year, the capital gains rate for non-business/non-rental property is 15% (although a large gain can trigger AMT and make this closer to 17%). If you owned less than a year, ordinary rates.

3. Sale of home rules.
If this was your primary residence 2 of the last 5 years; and
If you owned this home 2 of the last 5 years; and
If you didn’t exclude the gain on another home in the past 5 years, you may be eligible to exclude $250K of gain ($500K if married).

If you had to sell because of unforeseen circumstances (loss of job counts!), but don’t meet the 2 year rules, the amounts are prorated. Eg, 1 year, $125K.

4. If there was ever any business or rental use (depreciation), the rules are slightly different. Depreciation is recaptured at up to 25%; a like kind exchange reduces the exclusion and you can only use the exclusion if it’s 5 years after the exchange….

Treasurys edge up before pending-home-sales data

NEW YORK (MarketWatch) — Treasury prices turned slightly higher early Tuesday, nudging yields down, with the only economic data due a report on pending home sales. Analysts said the market may j…

Question: If I acquired a property through a 1031 exchange, can I later make it my personal residence?

What does the IRS say about moving into a property that was purchased as an investment? I have a fourplex, and one of the units will soon be vacant and I’d like to live there myself. If I did that, could the IRS go back and ding me for the capital gains on the original property that I sold in order to buy this one? Also, can I continue to claim depreciation on the three remaining units?

Answer: You walk a fine line. In order for you to have a valid 1031 exchange, you need to acquire a property of a similar kind that is used in a trade or business. Broadly speaking, if you move into the place, it will not be used in trade or business, and therefore you fail the 1031 test. The transaction will be taxable.

However, if you use the property in a t/b for a period of time and then convert it to a principal residence, then there will be sufficient time between the 1031 and the conversion to show that it was indeed used in a t/b. How much time is required is unknown.

in the case of split use property such as an apt complex, living in 1 of the units may be considered a partial failure of the 1031 while the reamining unit would be a successful 1031.

These are very factual inquiries that cannot be answered with any certainty on Yahoo!. You should consult professional advice.

*****Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency*****

IRS offers tips for upcoming tax season

The IRS Monday kicked off its annual tax preparation season by announcing a program to more closely scrutinize paid tax preparers and offering consumers tips on legitimate deductions for their 2009 tax returns.

Small business CGT relief: $6m assets or $2m turnover tests?