Owned a home for 2 and a half years. sold it with a net profit of 90k after the mortgage loan has been paid off. do I have to pay taxes on those funds? I am in TN

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Bsch4477

Level 15

You qualify for the home capital gain exclusion of 250K/500K. Your capital gain is your proceeds from the sale minus your purchase price and any capital improvements. My understanding is that Tennessee doesn’t tax capital gains.

xmasbaby0

Level 15

SALE OF HOUSE

If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

NCperson

Level 15

@george-angelov-g - please read the posts above closely.... the mortgage has NOTHING to do with calculating the capital gains

Carl

Level 11

The mortgage payoff is "not" tax deductible and therefore has nothing to do with your gain. Only the interest you paid on the mortgage during the tax year is deductible. That's it. So your more accurate gain is the 90K you pocketed, plus the mortgage payoff amount, minus the total interest paid on the loan in 2022.

Anonymous_

Level 15

@Carl11_2 wrote:

.....your more accurate gain is the 90K you pocketed, plus the mortgage payoff amount, minus the total interest paid on the loan in 2022.

The above-quaoted passage is not correct. As @NCperson stated, your mortgage has nothing to do with calculating the capital gain on the sale.

Capital gain would be your sales price (less selling expenses) minus your adjusted basis (typically your purchase price plus the cost of any improvements made) - disregard your mortgage in this calculation.