Hello,
Im getting ready to sell a property that i have owned for 20 years. I have lived in all but the last year. I paid 50,000 and am selling for 500.000 i have put 50 or 60 in it over the years how can i reduce the capital gains also when do i have to pay them.
What have you been doing with the property during the past year?
Are you under any particular pressure to sell now, or do you have time to implement any tax-advantaged exit strategies?
Are you married, and has your spouse occupied the property with you as her primary residence during the two years before you vacated the property?
I am married but my wife has never lived at the property that I am planning to sell. For the past year and 2 months the house has sat vacant. I really cant put off selling, the group attempting to aquire the property are developers and are in a bit of a hurry. Thanks, Mike
If you sell now, you will be able to use the Section 121 capital gains exclusion to shield the first $250K of your profit from capital gains taxes.
Unfortunately, since your wife does not meet the two year occupancy requirement as her primary residence, she is not entitled to an additional $250K capital gains exclusion even if you file a joint tax return.
Your cost basis ($50K purchase price plus $50K capital improvements) is subtracted from your net sale price ($500K minus selling costs/closing costs) to determine your taxable profit. If your taxable profit is $360K (for example), then the first $250K will be exempt from capital gains taxes. The remaining $110K will be taxed as a long term capital gain.
Thankyou
That information was very helpful. I have a couple other houses I am just starting to remodel so Im sure I will be osting again.