Primary home capital gains

[Maj92az]

In 2021 I sold a primary residence i held for 6 months. I am claiming the (523??) Exclusion because we moved for a job. 

On December 1st I am selling our home again that we held for 6 months. I am curious what other things I can deduct from the profit. 

Part of me things I can deduct the closing costs from the beginning, is this true? I know I'll subtract the selling fees and any improvements I made. I can't use the same exclusion again. 

Are there any other things that I "paid" into the home that I can deduct from the capital gains? Not the mortgage interest right? 

[Critter-3]

If you had already used the exclusion within the last 2 years you cannot use the exclusion again not even a partial one.

Purchase price + cost to buy + any improvements made while you owned it + cost to sell = basis

Sales price - basis = cap gain or loss. 

[Maj92az]

Thank you. Yes I will not be using the exclusion on this one. The profit from the first was much larger.

When you say "cost to buy" (and mention purchase price as well).. what typical things can be deducted under "cost to buy"

[Critter-3]

I don't think I could have been clearer ...   Purchase price + cost to buy 

You bought the home for a price and you had closing costs on the closing statement ... look at the closing statement for the figures you need.  

[Anonymous_]

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@Critter-3 wrote:

I don't think I could have been clearer ...   Purchase price + cost to buy 

@Critter-3 is correct; the calculation is simple. 

Your purchase price plus certain closing costs plus improvements equals your adjusted basis.

[Critter-3]

I sold my home, what can I deduct?

Have a look at Selling Your Home by the IRS for more in-depth information.

[Opus 17]

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@Critter-3 wrote:

If you had already used the exclusion within the last 2 years you cannot use the exclusion again not even a partial one.

Purchase price + cost to buy + any improvements made while you owned it + cost to sell = basis

Sales price - basis = cap gain or loss. 

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Incorrect.

If the taxpayer sells due to one of the safe harbor reasons on page 6 of publication 523, they can claim a partial exclusion even if they use the exclusion less than 2 years prior.  Each partial exclusion is based on the shortest of three time periods:

• how long the taxpayers owned the home
• how long the taxpayers lived in the home
• how long since the exclusion was last used.

If home #1 was sold in early 2021, after owning for 6 months, and the reason for the sale was one of the reasons that allows a partial exclusion (like a change in work location of more than 50 miles), the taxpayer can claim a partial exclusion on the gain. 

If home #2, sold on December 1, was also sold due to a job change or other allowable reason, then a partial exclusion may still be claimed.

If home #2 is not eligible for a partial exclusion, the items that are allowable adjustments to cost basis are described in publication 523 beginning on page 8.

https://www.irs.gov/pub/irs-pdf/p523.pdf

[Anonymous_]

Actually, I believe @Critter-3 is correct.

Based upon another thread, @Maj92az does not qualify for any of the safe harbors with respect to the sale of the second primary residence.

[Opus 17]

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@Anonymous_ wrote:

Actually, I believe @Critter-3 is correct.

Based upon another thread, @Maj92az does not qualify for any of the safe harbors with respect to the sale of the second primary residence.

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Review pub 523, page 7, Worksheet 1, Part B, step 1.

The 2-year lookback is not a barrier to the partial exclusion, it is part of the calculation for how much partial exclusion you get.

(Although it may apply to other homeowners but not this taxpayer.)

[Anonymous_]

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@Opus 17 wrote:

The 2-year lookback is not a barrier to the partial exclusion, it is part of the calculation for how much partial exclusion you get.

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I am aware of that fact. My only point was that it does not apply to second sale by this user, @Maj92az. 

[Opus 17]

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@Anonymous_ wrote:

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@Opus 17 wrote:

The 2-year lookback is not a barrier to the partial exclusion, it is part of the calculation for how much partial exclusion you get.

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I am aware of that fact. My only point was that it does not apply to second sale by this user, @Maj92az. 

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Where does it say that?  Where does it say that the partial exclusion rule can't be used more than once?  If you can buy a house and be forced to move due to unforeseen circumstances, why can't a different set of unforeseen circumstances happen to you before the next 2 years are up.

Nothing in the regs says the partial exclusion can only be used once.

https://www.law.cornell.edu/cfr/text/26/1.121-3

[Anonymous_]

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@Opus 17 wrote:
Where does it say that?  Where does it say that the partial exclusion rule can't be used more than once?

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I did not state the partial exclusion cannot be used more than once.

What I did state is that it does not apply to this user in this particular case since the second sale did not qualify under any of the safe harbor rules.

You are assuming that the second sale falls within a safe harbor provision.

From the other thread:

I have a primary residence I've had for only 6 months. I am under contract to sell with (after selling fees) a profit of $26K. I had no idea we were moving so we put some money into the home. I can not claim any of the exclusions...just deductions on my improvements.

[Maj92az]

Anyways. Thank you all. 

I appreciate the discussion and options. 

I will add... when I wrote "I can not claim any of the exclusions...just deductions on my improvements" 

I only said I Can Not because I was under the impression only once in a 2 year period. I very well could fall in one of the categories again. I possibly fell into more than 1 on my early 2021 sale. 

[Anonymous_]

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@Maj92az wrote:

I only said I Can Not because I was under the impression only once in a 2 year period. 

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I was under the impression that you had read Publication 523 and, of course, you can use use the exclusion a second time if you qualify under one of the safe harbors.

[Mike9241]

a complete list is not possible - different locals - different closing costs.

here's a general list of some for a personal residence 

points - schedule A deduction 

appraisal fee (2)

credit report fee (2)

flood determination fee (2)

flood monitoring fee (2)

tax monitoring fee (2)

tax status research fee (2)

pest inspection fee (2)

survey fee (4)

title insurance binder (4)

lender's title insurance (4)

settlement agent's title fee(4)

title search (4)

mortgage recording fees (4)

state transfer tax (5)

escrow deposits - not deductible on Schedule A  nor do they add to basis nor are they selling expenses

homeowners association fees and charges (2)

home inspection fee (4 & 5)

home warranty fee (5)

real estate commission (5) 

title insurance - owner (4)

seller's credit (5 & 7)

 (2) non-deductible cost of obtaining mortgage - doesn't add to basis either

(4) buyer pays and adds to basis

(5) if it's a seller's expense adds to seller's basis

(7) credit to buyer - reduces basis