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leo-rmundt
New Member

Is primary home sale taxable in Colorado? If no, why does it show in Turbo tax as a gain?

 
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Cindy0H
New Member

Is primary home sale taxable in Colorado? If no, why does it show in Turbo tax as a gain?

There is a Colorado Source Capital Gains & Losses (see screenshot) that you can take if you qualify. So if you do have a gain, despite the exclusion, it will not be taxed in Colorado if you can take the subtraction.

In Colorado and on your federal return, most of the time, you won’t have to worry about capital gains tax unless you’re an investor. The IRS allows you to exclude up to $250,000 of capital gains on real estate if you’re single or $500,000 if you’re married filing jointly. However, you’ll lose that benefit if the home wasn’t your primary residence, you owned the home for less than two years in the five years before selling it, you didn’t live in the house for at least two of those years, you already claimed the exclusion on another home in the past two years or you swapped the home in a 1031 exchange. 

If you have other questions about this, ask in the comment section below.

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3 Replies
Cindy0H
New Member

Is primary home sale taxable in Colorado? If no, why does it show in Turbo tax as a gain?

There is a Colorado Source Capital Gains & Losses (see screenshot) that you can take if you qualify. So if you do have a gain, despite the exclusion, it will not be taxed in Colorado if you can take the subtraction.

In Colorado and on your federal return, most of the time, you won’t have to worry about capital gains tax unless you’re an investor. The IRS allows you to exclude up to $250,000 of capital gains on real estate if you’re single or $500,000 if you’re married filing jointly. However, you’ll lose that benefit if the home wasn’t your primary residence, you owned the home for less than two years in the five years before selling it, you didn’t live in the house for at least two of those years, you already claimed the exclusion on another home in the past two years or you swapped the home in a 1031 exchange. 

If you have other questions about this, ask in the comment section below.

View solution in original post

Reaganfi
New Member

Is primary home sale taxable in Colorado? If no, why does it show in Turbo tax as a gain?

Will be divorced by the time our house goes up for sale.
I was just told by accountant here in Colorado that you take price you paid for the house originally and subtract the profit amount from the sale, then pay 20% tax on that.  That would be a negative number wouldn’t it. Real estate usually appreciates doesn’t it?  We paid $250,000. originally and my portion of the profit from the sale is $400,000.  How do I figure this out?

Critter-3
Level 15

Is primary home sale taxable in Colorado? If no, why does it show in Turbo tax as a gain?

Add together the original purchase price + the cost of purchase + the cost of sale + any improvements = the cost basis which you split with the ex.  

 

Then the sale should be reported on separate 1099-S forms  so you each report 1/2 of the sale on your individual returns.   Your 1/2 of the  Sales price on the 1099 form - your half of the cost basis =  profit/cap gains. 

 

Then if you lived in the home for 2 of the last 5 years ending on the date of sale you each will be able to exclude up to $250K of profit.  

 

Simple sample : 

 

Purchase price $250K =  $125 each

 

Sales price $1,050,000   = $525K each

 

525K - 125K = $400K  

 

$400 - $250 exclusion(if eligible)  = $150K profit x 20% tax = $30K tax on profit so this is the max amount of taxes on the return ... could be lower depending on the rest of your income.  

 

 

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