If I sold my house in April of 2025 what year do they use my taxable income from. Will the irs use my 2024 1040?

[DaveF1006]

No. You will report the sale in your 2025 tax return, which is next tax season.

[xmasbaby0]

You do not enter anything about a house you sold in 2025 on a 2024 tax return.

[barretthackbart]

So they are going to wait till 2025 tax season to see what my taxable income. What if I lose my job or die then what happens to the taxes?

I was asking if they would use my taxable income from 2024 amount to how much I’d owe for capital gains when I sell my house this year 

[xmasbaby0]

No, they are not going to use your 2024 income to determine if you owe capital gains on a home you sell in 2025.  They will use your 2025 income.

Here is some information about selling a home that might help you:

SALE OF HOUSE

If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

• If you are using online TT, you need Premium software to report the 1099-S

[barretthackbart]

Ok thanks,

was hoping they’d use my 2024 as if be under 47k taxable income where as 2025 I will be over 47k taxable income and would have owned the house only 1 and 1/2 years so can’t get exempt for the 2 year rule

[barretthackbart]

To add I also only made 80k profit on house

[TomK2023]

If you owned and lived in the home for a total of two of the five years before the sale, then up to $250,000 of profit is tax-free (or up to $500,000 if you are married and file a joint return). If your profit exceeds the $250,000 or $500,000 limit, the excess is typically reported as a capital gain on Schedule D.

For more information, see this helpful TurboTax article: Tax Aspects of Home Ownership: Selling a Home

@barretthackbart 

[xmasbaby0]

@barretthackbart It seems your situation is that when you sold the house, you had not yet owned it for even two years.

There are some special circumstances where there can be exceptions to the two to five year ownership requirement---so read the information here about those situations and see if any of them fit your reason for selling before two years.

https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6t...

[barretthackbart]

it seems that non of the exceptions work for me. I’m selling my house to move into a farm about 20 min away. That’s the only reason for selling my house. I guess the only way to get out of capital gains tax is lower my taxable income some how.

[NCperson]

@barretthackbart I think you may misunderstand how that capital gains tax works. 

Let's say your 2024 taxable income is $40k and the home sale did indeed occur in 2024 and the profit was $80k. 

When you state "taxable income" that means you have already subtracted the standard deduction ($14,600 filing SINGLE) from your adjusted gross income.  

So your total taxable income is $120k.  Since there is no capital gains tax up to a combined taxable income of $47k and your earned income is $40k, the first $7k of the capital gain would be taxed at 0%, but the remaining $73k of capital gain would be taxed at 15%. 

I suspect from the way you wrote the post, I wonder if you are thinking that if the sale was counted in 2024, the tax would be zero, since your taxable EARNED income is less than $47k.  That is not the way it works.