Will I owe any income tax if I sell my home for more than what I paid for it? I have to ask a question of you to be able to answer it and the answer’s probably no. Have you owned the property and resided in it for two out of the past five years? If so, you can then exempt from any sale $250,000.00 and if you own it with another party or husband and wife, you can exempt up to $500,000.00. The sale does not have to be reported to the Internal Revenue Service. However I believe on your tax return there is a box that you have to indicate whether you sold your residence.
You also have to state that you haven’t taken this exemption also in the past, I forget how many years, but you can’t double dip if it’s a second marriage or a second home or residence. So usually you do not have to pay it, however if you have not owned it and lived in it for two out of the past five years and you sell your home, then you will have to pay long term capital gains on it if you’ve owned it for more than I believe it’s six months or a year. But you do have to pay tax. Unfortunately if you sell it for less then what you paid for it, well then you do not get to take a loss because it’s not an investment property. You only have to pay on the gain.
Also this is a question that comes up many times when someone short-sells their property. And so if you sell it for less than what you paid for it and then your lender gives you a 1099 of whatever the gain is, you can offset the whatever gain the lender gave you a 1099 for against the sales price and your loss so you won’t have any income tax liability and you also may be able to exempt the transaction under the two year living there and owning it for two out of the past five years.
So if you have any questions on it or want to sell your home, well give me a call at 727-847-2288.