capital gain taxes

Feb 26, 2007 3 Replies
M

Do I have to talk to an accountant (perfectly willing to pay $$ for short consultation) or this is trivial?



Facts: I have two houses that I am going to sell this year. House #1. My ex has lived there for seven years (jointly owned by both of us). She/we will be selling it, we'll share the profit (I expect my share to be $90k or so). The house is not my primary residence. It is not exactly an investment either as I do not get paid any rent. House #2. My own. I expect to get just under $100k profit when/if it sells. I am planning to use at least 50%-100% of what I get for both houses as the downpayment for the new house.



Questions: Do I get to pay capital gain taxes? And if I do, how to minimize them? Thanks! Michael



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"Michael" wrote

Ok, the good part and the bad part.

The good part is that the gain on either house can qualify for the gain exclusion under Section 121.

The bad part is that the gain in the other house will be taxed.

The good part is you get to chose which house to take the gain on and which to exempt. I'd exclude the one with the higher gain amount.

The reason is, the house your ex lives in still qualifies, as long as you ~or~ her lived in the house as their primary residence for the 2 of 5 year rule. You can only exclude the gain on one house every two years. So timing gets you on the second house.

Most likely, yes. I don't see any reasons the sale of the second house would be exempt.

See above. Claim the exclusion on the house with the greatest gain amount to you.

What you do with the proceeds of either or both houses is irrelevant.

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"Michael" wrote

That's old law, long gone and only found in old tax booklets.

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