I sold my home in CA. Made a very good capital gain on it. Do I need to pay taxes on it
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If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).
If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.
If you have a reportable gain you will have long term capital gains on the home subject to capital gains taxes assuming you lived in and owed the home for at least two years in the five year period on the date of sale.
Gain on the sale equals the Selling price minus sales expenses minus the Adjusted Basis of the home (Purchase price plus the cost of improvements to the home prior to the sale)
If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).
If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.
If you have a reportable gain you will have long term capital gains on the home subject to capital gains taxes assuming you lived in and owed the home for at least two years in the five year period on the date of sale.
Gain on the sale equals the Selling price minus sales expenses minus the Adjusted Basis of the home (Purchase price plus the cost of improvements to the home prior to the sale)
The determination of whether you'll be taxed on your capital gains depends upon a few factors. The tax code provides for an exclusion of up to $500,000 in capital gain for married filing jointly, $250,000 for others. To qualify for the exclusion, you must have lived in the residence for at least two of the past five years. And, you must not have used the exclusion on another home for two years prior to the current sale. If you meet those criteria, the first $500,000 in gain is excluded from taxation. Additional details, as well as the possibility of a partial exclusion under exceptional circumstances, can be found in IRS Topic 701, with more details in Publication 523.
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