Capital Gains Tax

[BethE]

We live in Texas and just sold our home. We had a profit of $77,000. We put $27,000 down on a fifth wheel, which is our new "home". Will we have to pay capital gains tax on the whole $77K or on what's left after the $27K down payment?

[xmasbaby0]

The down payment on your new home is irrelevant.

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 Premier or Self-Employed software to report the 1099-S

[BethE]

We didn't live in the house for two years. We had to sell it to move back to the Dallas area due to medical reasons. Will that affect what we have to pay?

[Corrlich44]

As a follow-up to the earlier comment, any funds paid in advance to reduce your overall payment during the home is called an investment. It will have nothing to do with the taxation of your previous home, especially if your combined net gain is under $500,000, if filing as Married Filing Joint and having lived in that home for at least 2 out of the last 5 years, which will exclude any amount you received from taxation.

[Corrlich44]

There may be a partial deduction for the length of time to exclude some of it but it will also be impacted by the tax bracket you may fall in making it subject to 0%, 15% or 20%.

[conniem123]

Hi BethE,  I understand you did not live in the home for two years.  Even so, you may be eligible for the gain exclusion based on a health related move.  The IRS Pub 523 goes into detail of the exceptions to the 2 year rule, particularly health related moves on page 6.

https://www.irs.gov/pub/irs-pdf/p523.pdf

I hope you find this helpful!