Sale of 1st Home in Texas

Sep 07, 2008 1 Replies
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I'm single (in 25% tax bracket) and purchased my 1st home for $350,000 in May 2008. My intention was to have this be my main home but I have an opportunity to sell it for approximately $450,000 before the end of this year. If I sell it what are tax implications? Will the profit be considered ordinary income instead of capital gain? If it's a capital gain, can I qualify for the $250,000 capital gains exemption even though I did not own or use the house for 2 years?


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You'll have a short-term capital gain. Note that purchase and sale expenses are considered when determining the amount of gain, so your taxable gain will likely not be exactly $100,000. See IRS Publications 550 and 551.

Short-term capital gains are taxed as ordinary income.

No. Some people who don't own and occupy the property for 2 years qualify for a reduced exclusion, but you must meet one of the reasons for selling explained in IRS Publication 523.

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