hey all i’m trying to clear up any confusion …maybe someone can provide some insite.
right now my biggest debate is whether or not I’m going to sell my house. my theory is, if the capital gains tax i will be hit with (if sold today) = the holding costs from living in the home for two years…then im going to live in it for two years and then sell. if the holding costs are more expensive then i’ll just take the big hit now.
having that said, as i understand it a single person is able to profit up to $250k if they live in the home for 2 years. lets say i live in the house and sell the home making $150k profit. does this profit get taxed as regular income? …or some other bracket tax?
thanks all.
ryan
Ryan,
Your profit will not be taxable because it is within the $250K exemption. This is a great way to buy a home, live in it, then move every couple of years and make a tax-free income. You just have to select the right houses.
Da Wiz
you’re telling me its completely tax free? …from all taxes? :o
It’s completely tax free from the first $250k of capital gains tax. If your profit is $150K, you pay zippo.
Da Wiz
Alllllllllllllll Righty then! (in Ace Ventura voice). excellent…thanks for your replies ;]
The $250K capital gains exclusion applies to your federal income tax return. Many states follow the federal guidelines, but not all do. You will have to confirm for yourself whether your state also allows this exclusion.