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How will I be taxed on the money from the sale of my house?

While waiting to sell my current home, I would like to take $90,000 from my savings and use it as the 20 percent down on a new home. Once my old home sells, I would like to pay myself back the $90,000. How will I be taxed on the money from the sale of my house?

Real Estate, Taxes
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August 2018

If the house you are selling has been your primary residence two out of the last five years, you will have $250,000 capital gains tax free if you are single and $500,000 capital gains tax free if you are married.

In determining how to calculate your capital gain exposure, you will take what you paid for the house, add the cost of any improvements to determine your cost basis.  So for example, if you paid $200,000 for your home and you improved it with new windows, new bathroom(s), kitchen or any other qualified improvements that cost $100,000 over the time you have resided in your home, your cost base would be $300,000.  Let's say you sold your home for $450,000.  That price would be $150,000 of capital gains.  That number is less than the allowed amount of $250,000 as a single person or $500,000 as a married person, so you would owe no taxes.  If it sold for $600,000, the capital gains would be $300,000.  You would have $300,000 minus $250,000 (as a single person) = $50,000 for your capital gains exposure.  If you were married, again the $300,000 gain is less than the $500,000 so there would be no capital gains exposure. If you have resided in the home less than two out of the five years, any gain over the cost basis is exposed to capital gains.  You may consider consulting your accountant to determine the exact gain exposure if any.

August 2018
August 2018
August 2018
August 2018