How long do I need to own to avoid high taxes?

I heard that if you own the home less than 12 months you pay really high taxes on the sale. Anyone know anything more about this? Does it drop considerably after 12 months of ownership? Does it make it worth holding on to it that long?

Real estate proceeds on property held for less than 12 months is taxed as ordinary income, so the rate will be whatever tax rate that you fall into. Real Estate held for more than 12 months is taxed as a “capital gain” and is taxed at the 15% capital gains rate. If you are in a high income bracket, the tax on ordinary income could be considerable.

Hope this helps…

Keith

Is there a website or something that shows the different income tax brackets? I would like to see what i’d fall into. So you are saying that if I made a $60,000 profit from a sale I would be taxed at the bracket of $60,000 plus my regular income for that year? Thanks, Amy

Amy,

That’s exactly what I’m saying…there is an almost certain chance that adding $60K of income will boost you into a higher tax bracket than you are already in…

For a ballpark figure, take this year’s tax return, tack $60K on to your taxable income (line 42 of the Form 1040) and look that amount up on the tax tables – probably not real pretty!

www.irs.gov