@prouse54 wrote:
I lived in my home in Idaho for 7 months and relocated to Texas for a new job. I made $125,000 gain not counting $12,000 remodel, $ 30,00 escrow fees and $3,000 moving fees. Will I have to pay capital gain?
Yes. You need to review publication 523 to determine what your gain actually is.
https://www.irs.gov/pub/irs-pdf/p523.pdf
Your gain is the difference between the selling price and your adjusted cost basis. The remodel is probably an adjustment that increases your basis, so your gain might only be $113,000. Moving expenses are not tax deductible unless you are in the military, and they are never part of the capital gains calculation (they would be deducted on a different form if your are in the military). Certain closing costs can be used as adjustments to basis, you will need to look at the list in publication 523. Most of your escrow fees and closing costs are not basis adjustments.
If you are single or head of household (not filing as married filing jointly), your maximum capital gains exclusion is $250,000. Since you only lived in the home 7 months out of the 2 year or 24 month requirement, you can only exclude 7/24 of that amount. That's 29%, so 29% of $250,000 is $72,916. That means that after you determine your adjusted cost basis and know the actual gain amount, the first $72,916 is tax-free and anything over that is a short-term capital gain that will be taxed as ordinary income.
Turbotax will actually figure it to the day; you will need to give the date you bought the house, the date you sold it, the date you moved in, and the date you sold your previous house. The partial exclusion percentage is determined by the shortest time:
- the number of days you owned the home
- the number of days you lived in the home as your main home
- the number of days since the last time you sold a home
