Does the profit I made on my home sale count towards my income? Should I be eligible for a property tax credit if I sold my house 11/9/2017 and made under $50,000?

[AmeliesUncle]

Although I realize the original question is quite old, the original question had asked about a "property tax credit".

If this is asking about the Minnesota Property Tax Refund, YES, selling  your house counts as income for purposes of calculating that credit.  It still counts even if you qualify to "exclude" the gain from income taxes because you lived there 2 out of the last 5 years.

[yc313]

@DoninGA 

If I sold my second home at a loss, did not use it for rental nor business, and did not receive a form 1099, do I need to report the sale? Thanks!

[DoninGA]

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@yc313 wrote:

@DoninGA 

If I sold my second home at a loss, did not use it for rental nor business, and did not receive a form 1099, do I need to report the sale? Thanks!

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If the second home was never used as rental or in a business and it was 100% for personal use, you do not report the loss on a tax return.  Unless you received a Form 1099-S for the sale then the sale has to be reported on a tax return, gain or loss.

[Podestam]

My annual income is $30,000. I have a rental home I purchased many years ago for $500,000, I sell it for $1M. Does this sale now make my total income $530,000 which put me in to the 20% Capital gains tax bracket? Which would require me to pay $100,000 in taxes on the sale of my home ($500,000 profit x 20%)? 

[EssayX16]

Moved from house A (no mortgage) to house B. From then on house A was not used. Roof went bad in house A.  Significant internal damage not covered by insurance. Sold to a house flipper at low price on "fix or sell" order by city. Are sales proceeds taxable by IRS?

[AmeliesUncle]

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@Podestam wrote:

My annual income is $30,000. I have a rental home I purchased many years ago for $500,000, I sell it for $1M. Does this sale now make my total income $530,000 which put me in to the 20% Capital gains tax bracket? Which would require me to pay $100,000 in taxes on the sale of my home ($500,000 profit x 20%)? 

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For best results, enter your estimated information into a 'mock' tax return.  There are A LOT of variables.

But in a nutshell, that $500,000 is taxed at UP TO 20%.  Part will be taxed at 0%, much of it will be taxed at 15%.  Some will be taxed at 20%.  

BUT there is more.  You will also owe tax on the gain due to the depreciation that you took (or should have taken).  That is taxed at your regular tax rate, up to 25%.

And still more ... part of the gain will be subject to the 3.8% Net Investment Income Tax. 

And all of this 'extra' income could reduce (or eliminate) some other credits and deductions that you may usually qualify for.

Plus any State taxes.

Again, there are many variables.  For best results, create a 'mock' account/tax return and enter all of your estimated information.  The CD/downloaded version is easiest to try out various scenarios (plus it is just better than the online version anyways).

[Podestam]

Wow its much more complicated then I thought I will for sure try a mock return as I'm currently living within this home and debating to sell taking my $500k joint capital gains deduction or to rent and sell later losing the ability to take the $500k deduction living within the home 2 of 5 years.

Also as this is my primary home I have not taken any deprecation as I believe deprecation can only be applied to rental properties? 

[BillM223]

@Podestam

"Also as this is my primary home I have not taken any deprecation as I believe deprecation can only be applied to rental properties? " - it also applies if you took depreciation for office-in-home.

Yes, you are looking at tax planning, which requires assumptions and trial and error. Good luck!

[Undone4]

Thanks for asking this. Following

[Opus 17]

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@yc313 wrote:

@DoninGA 

Thanks for your advice. Just to clarify, I lived in my home for less than 2 year in the last 5 years, however I did not use it as a rental or as business, is it still considered personal residence? 

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The 2 year/5 year rule explains when you can exclude some of your gain on a personal residence, but the idea of a personal residence is how you used it.  If you used it as a personal residence, that's what it is, and you can't deduct capital losses. 

[Undone4]

Does the gain of $250k or $500k include the sale total amount only? Or is it what you bank after you pay off the mortgage? 

Does it change anything if you put it right into a new mortgage? 

[Opus 17]

Your gain is the difference between the selling price and the purchase price. For example, if you bought the house for $100,000 and he sold it for $300,000, you have a gain of $200,000.

It doesn’t matter what your sales proceeds are. suppose you bought the house with cash, then your proceeds are $300,000, $200,000 is the capital gain.   Suppose you refinanced your mortgage for $290,000 last year so that your sales proceeds are only $10,000. Your gain is still $200,000, you just cashed most of it out early.

You must report your gain in the year you sell your home. You can’t postpone the gain by buying a new home. That tax provision was eliminated about 1996. If this is business property, you can sometimes do a like kind exchange, but I can’t go into that now.

If this was your personal home where you lived, the gain may not be taxable. If you didn’t live there, or you don’t meet the minimum requirements, then you will pay tax on your gain amount.

[fjpuentes1974]

What if Income is above the threshold you described?

[stokerdws]

when you do home improvements on a home and then you sale it where do i put that on my tax return.

[DaveF1006]

Home improvements adds to the basis of the house when you sell it. To claim:

1. Go to federal>wages and income

2. Less Common Income>Sale of Home (gain or loss)>start

3. Go ahead, answer the preliminary questions about addresses and so on and so forth.

4. Then as you progress, you will arrive at the sales information, here you will report Date Sold, selling price, and sales expenses. Click on the expenses link that will let you know what to put there.

5. Next will be a page where you will enter your purchase information.

6. In the adjusted cost basis section is where you will report what you originally paid for the house plus the improvements made.

7. Finish out the section.

@stokerdws