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You owe capital gains tax whenever you sell an item of property for more than you paid for it. That includes houses and mobile homes. Long term capital gains tax (for property held more than one year) is 15% for most taxpayers, but some low income taxpayers will pay zero, and some high income taxpayers will pay 20%. Your gain is the difference between your cost basis and the selling price. You can increase the cost basis by certain closing costs and legal fees when you bought the home, and you can reduce the selling price by any legal fees, taxes, and real estate commission paid as part of selling the home.
There is a special provision for selling your personal residence. If you owned the home for at least 2 years, and lived in it as your main home for more than 2 years out of the last 5 years, you can exclude the first $250,000 of gain from taxation (or $500,000 if married filing jointly).
If you lived in the home and owned the home for less than 2 years, you may qualify for a partial exclusion if you are selling due to unemployment, medical issues that force you to move, or certain other "unforeseen circumstances." (One example is: you have a 2 bedroom house and become pregnant with twins, forcing a move to a 3 bedroom house before the 2 years is up.) Sometimes called a hardship rule. More examples are in publication 523.
If you believe you qualify for the hardship/unforeseen circumstance exception, you would get a partial exclusion. IF you owned the home for 18 months, you could exclude 18/24 x 250,000 = $187,000 of the gain, and then pay gains tax on any gain over that amount. You don't need to submit proof of the unforeseen circumstance with the tax return, but keep it on hand in case of audit.
You owe capital gains tax whenever you sell an item of property for more than you paid for it. That includes houses and mobile homes. Long term capital gains tax (for property held more than one year) is 15% for most taxpayers, but some low income taxpayers will pay zero, and some high income taxpayers will pay 20%. Your gain is the difference between your cost basis and the selling price. You can increase the cost basis by certain closing costs and legal fees when you bought the home, and you can reduce the selling price by any legal fees, taxes, and real estate commission paid as part of selling the home.
There is a special provision for selling your personal residence. If you owned the home for at least 2 years, and lived in it as your main home for more than 2 years out of the last 5 years, you can exclude the first $250,000 of gain from taxation (or $500,000 if married filing jointly).
If you lived in the home and owned the home for less than 2 years, you may qualify for a partial exclusion if you are selling due to unemployment, medical issues that force you to move, or certain other "unforeseen circumstances." (One example is: you have a 2 bedroom house and become pregnant with twins, forcing a move to a 3 bedroom house before the 2 years is up.) Sometimes called a hardship rule. More examples are in publication 523.
If you believe you qualify for the hardship/unforeseen circumstance exception, you would get a partial exclusion. IF you owned the home for 18 months, you could exclude 18/24 x 250,000 = $187,000 of the gain, and then pay gains tax on any gain over that amount. You don't need to submit proof of the unforeseen circumstance with the tax return, but keep it on hand in case of audit.
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