Tax due when I sell my share of the 40% of currently owned home?
January 23rd, 2010 | by admin |
wonderfulife asked:
I currently have 40% of the house shared with my father (60%). My brother would like to purchase the 40% and move in. How would I deal with my taxes when I sell my 40%? Is there a tax exemption if I use this 40% money that I receive and buy another property within a certain time frame? What about the 2 out of 5 rule that I read about, would I be qualified?
Ricky
I currently have 40% of the house shared with my father (60%). My brother would like to purchase the 40% and move in. How would I deal with my taxes when I sell my 40%? Is there a tax exemption if I use this 40% money that I receive and buy another property within a certain time frame? What about the 2 out of 5 rule that I read about, would I be qualified?
Ricky
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4 Responses to “Tax due when I sell my share of the 40% of currently owned home?”
By Brother Otter on Jan 24, 2010 | Reply
Jo
In the US, if this is your primary residence then you probably will not owe any taxes, and there is probably not a time limit for plowing the money into a new house.
Research Tax Topic 701 on the IRS website.
By TaxMan on Jan 27, 2010 | Reply
Randall
If you live in a home for any 24 months (or more) in the 60 months preceding the sale, and you own the home for any 24 months (or more) in the 60 months preceding the sale, and you haven’t sold a home in the preceding 24 months, then you will not have to report the sale nor will have to pay any federal income taxes on the sale if your gain is less than $250,000 (or $500,000 if you are married).
There are a million caveats like did you use the home for business and take depreciation, but I would hazard to guess that, like the other answerer said, you should be able to sell it without a worry in the world concerning federal income tax.
By MissKnowItAll on Jan 29, 2010 | Reply
Alvin
the 2 of 5 rule says if you lived in the residence for a cumulative period of two of the previous five years as your primary home, then you have a pretty high thresh hold before capital gains taxes.
You should talk to a real estate broker or tax attorney for the full implication of selling a your interest in a property.
It may depend on how the house is deeded and if it is financed.
By John M on Jan 30, 2010 | Reply
Johnny
The other answers are good ones. In general, if you only lived in the house, and it wasn’t a rental property or business location, you won’t have a tax due as long as you lived there 2 of the last 5 years.
The laws regarding taxing gains on your residence have improved for the typical person. You are less likely to be taxed on the sale of your own home than you once were.