Home sale exemption? ? ?

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Subject Author Date Home sale exemption? ? ? Ray 08-14-2009  Re: Home sale exemption? ? ? Nick Dixon 08-15-2009  Re: Home sale exemption? ? ? Arthur Kamlet 08-15-2009  Re: Home sale exemption? ? ? Ray 08-17-2009  Re: Home sale exemption? ? ? Arthur Kamlet 08-17-2009  Re: Home sale exemption? ? ? D. Stussy 08-17-2009  Re: Home sale exemption? ? ? Ray 08-17-2009
Posted by Ray on August 14, 2009, 6:34 pm Please log in for more thread options My friend is an 81-year-old single woman who owns a house that should sell for $800,000. How much capital gain would she pay on such a sale? I know it would be preferable for her to pass on the house to heirs, but she might not have that option. ========================================= MODERATOR'S COMMENT: We need to know how long she has lived there as her main home, and what her cost basis is. If it was jointly owned and her husband died, that changes things. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Nick Dixon on August 15, 2009, 2:07 pm Please log in for more thread options > My friend is an 81-year-old single woman who owns a house that should sell > for $800,000. > > How much capital gain would she pay on such a sale? > > I know it would be preferable for her to pass on the house to heirs, but > she might not have that option. > ========================================= MODERATOR'S COMMENT: > We need to know how long she has lived there as her main home, and > what her cost basis is. If it was jointly owned and her husband died, > that changes things. ************> 121 Exclusion Section 121 of the Internal Revenue Code, which is often referred to as the 121 exclusion, generally allows homeowners to sell real property held (owned) and used (lived in) as their primary residence and exclude from their taxable income up to $250,000 in capital gains per homeowner, and up to $500,000 in capital gains for a married couple filing a joint income tax return. Primary Residence The 121 exclusion can only be used in conjunction with real property that has been held and used as the homeowner's primary residence. It does not apply to second homes, vacation homes, or property that has been held for rental, investment or use in a trade or business. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Arthur Kamlet on August 15, 2009, 2:42 pm Please log in for more thread options > >> My friend is an 81-year-old single woman who owns a house that should sell >> for $800,000. >> >> How much capital gain would she pay on such a sale? >> >> I know it would be preferable for her to pass on the house to heirs, but >> she might not have that option. >> ========================================= MODERATOR'S COMMENT: >> We need to know how long she has lived there as her main home, and >> what her cost basis is. If it was jointly owned and her husband died, >> that changes things. >************> >121 Exclusion > >Section 121 of the Internal Revenue Code, which is often referred to as the >121 exclusion, generally allows homeowners to sell real property held >(owned) and used (lived in) as their primary residence and exclude from >their taxable income up to $250,000 in capital gains per homeowner, and up >to $500,000 in capital gains for a married couple filing a joint income tax >return. In the event one spouse dies, and Sec 121 is otherwise met, the surviving spouse has two years from date of death to sell and claim the full 500,000 after accounting for step up. So surviving spouse may file Single and still claim the 500,000 amount. >Primary Residence > >The 121 exclusion can only be used in conjunction with real property that >has been held and used as the homeowner's primary residence. It does not >apply to second homes, vacation homes, or property that has been held for >rental, investment or use in a trade or business. -- ArtKamlet at a o l dot c o m Columbus OH K2PZH -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Ray on August 17, 2009, 12:32 pm Please log in for more thread options >> >>> My friend is an 81-year-old single woman who owns a house that should >>> sell >>> for $800,000. >>> >>> How much capital gain would she pay on such a sale? >>> >>> I know it would be preferable for her to pass on the house to heirs, but >>> she might not have that option. >>> ========================================= MODERATOR'S COMMENT: >>> We need to know how long she has lived there as her main home, and >>> what her cost basis is. If it was jointly owned and her husband died, >>> that changes things. >>************> >>121 Exclusion >> >>Section 121 of the Internal Revenue Code, which is often referred to as >>the >>121 exclusion, generally allows homeowners to sell real property held >>(owned) and used (lived in) as their primary residence and exclude from >>their taxable income up to $250,000 in capital gains per homeowner, and up >>to $500,000 in capital gains for a married couple filing a joint income >>tax >>return. > > > In the event one spouse dies, and Sec 121 is otherwise met, > the surviving spouse has two years from date of death to sell > and claim the full 500,000 after accounting for step up. > > > So surviving spouse may file Single and still claim the 500,000 > amount. > > >>Primary Residence >> >>The 121 exclusion can only be used in conjunction with real property that >>has been held and used as the homeowner's primary residence. It does not >>apply to second homes, vacation homes, or property that has been held for >>rental, investment or use in a trade or business. > > -- > > ArtKamlet at a o l dot c o m Columbus OH K2PZH Thanks for the responses. The property has been primary residence for 33 years. Purchase price was $135,000. Improvements $50,000. Jointly owned until husband's death in 1981. Widow has lived there continuously since that time. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Arthur Kamlet on August 17, 2009, 12:44 pm Please log in for more thread options > >>> >>>> My friend is an 81-year-old single woman who owns a house that should >>>> sell >>>> for $800,000. >>>> >>>> How much capital gain would she pay on such a sale? >>>> >>>> I know it would be preferable for her to pass on the house to heirs, but >>>> she might not have that option. >>>> ========================================= MODERATOR'S COMMENT: >>>> We need to know how long she has lived there as her main home, and >>>> what her cost basis is. If it was jointly owned and her husband died, >>>> that changes things. >>>************> >>>121 Exclusion >>> >>>Section 121 of the Internal Revenue Code, which is often referred to as >>>the >>>121 exclusion, generally allows homeowners to sell real property held >>>(owned) and used (lived in) as their primary residence and exclude from >>>their taxable income up to $250,000 in capital gains per homeowner, and up >>>to $500,000 in capital gains for a married couple filing a joint income >>>tax >>>return. >> >> >> In the event one spouse dies, and Sec 121 is otherwise met, >> the surviving spouse has two years from date of death to sell >> and claim the full 500,000 after accounting for step up. >> >> >> So surviving spouse may file Single and still claim the 500,000 >> amount. >> >> >>>Primary Residence >>> >>>The 121 exclusion can only be used in conjunction with real property that >>>has been held and used as the homeowner's primary residence. It does not >>>apply to second homes, vacation homes, or property that has been held for >>>rental, investment or use in a trade or business. > >Thanks for the responses. > >The property has been primary residence for 33 years. Purchase price was >$135,000. Improvements $50,000. Jointly owned until husband's death in 1981. >Widow has lived there continuously since that time. Her gain less exclusion of $250,000 is long term taxable gain. Her gain is her sales price less (adjusted cost basis plus improvements). Adjusted cost basis depends on whether this is a community property state or not. If a community property state, the cost basis is stepped up to the market value on date of husband's death. Otherwise half the cost basis is stepped up and the other half is based on the original cost. Add improvements to cost depending when they ocurred. If she can afford to take back the mortgage and treat this as an installment sale, she pays tax on the gain only as she receives it over time. Long term gain rates are likely to go up, so that's another consideration. -- ArtKamlet at a o l dot c o m Columbus OH K2PZH -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Sale of Main Home - $500,000 Exemption November 15, 2006, 10:06 pm Calif. sales tax exemption - occasional sale August 9, 2009, 7:27 pm sell home to your corp or LLC to become a rental and claim $500k exemption? July 29, 2008, 1:24 pm Home improvements to reduce profit from home sale? 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