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I sold my home I lived in for 9 years. I got $48000. Out of it how do I figure taxes on it?

3 Replies
Level 15

I sold my home I lived in for 9 years. I got $48000. Out of it how do I figure taxes on it?

The cash you got out of it doesn't matter.  The mortgage doesn't matter.  How much was the full selling price?   What did you buy it for and when?   Your profit (or loss) if Selling price minus (purchase cost + improvements). 

Are you married or single?  You can exclude up to 250,000 (500,000 for married) of the profit from taxes.   For a primary home, if you owned and lived in your house for 2 out of the last 5 years when you sell you can exclude the gain up to $250,000 for single or 500,000 for married from tax.  You can not take a loss on your tax return.


So you might not have any tax on it.

Level 15
Level 15

I sold my home I lived in for 9 years. I got $48000. Out of it how do I figure taxes on it?

If you are not able to exclude the entire profit, calculating the tax is a bit complicated. It's a long-term capital gain, which is taxed at lower rates than ordinary income. But the rate that applies depends on how much other income you have in the year of the sale, and it's possible that not all of the profit is taxed at the same rate. If your total taxable income, including the taxable part of the profit on the home, is low enough, some or all of the profit might be taxed at 0%.

If you have some taxable profit, you can easily get a quick estimate of the tax by using TaxCaster. Enter all your income and other information except the profit on the sale of your home, and see what your estimated refund or amount owed is. Then enter the taxable profit on the home, after subtracting the exclusion, as long-term gain, and see how the estimated refund or amount owed changes.


Opus 17
Level 15

I sold my home I lived in for 9 years. I got $48000. Out of it how do I figure taxes on it?

1. Your capital gain is the difference between the selling price and the purchase price or cost basis.   

Suppose you bought the home for $100,000 and sold for $200,000.  You only got $48,000 cash because in the past, you took out an HELOC.  Your gain is still $100,000, it's just that you took some of the gain out early through the HELOC.


2. You can include some closing costs in your basis as adjustments, see publication 523.


3. If you owned the home for at least 2 years, and lived in the home for at least 2 years in the past 5 years as your main home, you can exclude (not pay tax on) up to $250,000 of capital gains if you are single or $500,000 if you are married filing jointly.

Using as your main home for 2 of the past 5 years means 730 days out of the 1825 days before the sale, the days do not have to be consecutive.


4. If your gain is less than $250,000 (or $500,000) and you qualify for the exclusion, and you did not get a form 1099-S at the sale, you don't even have to report the sale on your tax return.

If you got a 1099-S, you must report the sale even if you can exclude the gain.


5. If your gain is more than your exclusion or you don't qualify for the exclusion, your gain is a long term capital gain taxed at 15% (sometimes 20%) on your federal return, and at your regular state income tax rates on your state income tax return.  You can make estimated payments to the IRS and the state now.  If you overpay your estimate, the overpayment will come back to you in your tax refund.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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