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Posted by Phil Marti on September 7, 2008, 7:16 pm
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"kwtx08rm" wrote:
> I'm single (in 25% tax bracket) and purchased my 1st home for $350,000 in
> May 2008. My intention was to have this be my main home but I have an
> opportunity to sell it for approximately $450,000 before the end of this
> year. If I sell it what are tax implications?
You'll have a short-term capital gain. Note that purchase and sale expenses
are considered when determining the amount of gain, so your taxable gain
will likely not be exactly $100,000. See IRS Publications 550 and 551.
> Will the profit be
> considered ordinary income instead of capital gain?
Short-term capital gains are taxed as ordinary income.
> If it's a capital
> gain, can I qualify for the $250,000 capital gains exemption even though I
> did not own or use the house for 2 years?
No. Some people who don't own and occupy the property for 2 years qualify
for a reduced exclusion, but you must meet one of the reasons for selling
explained in IRS Publication 523.
--
Phil Marti
Clarksburg, MD
--
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