Will I have to pay tax on the sale of my house?

[@anthonyyoung286]

Andy, thank you so much for sharing this info. I was just doing a search on Google and KZbin because I really needed to help my mom with taxes on the sale of her home this past October. I had no idea about the step-up in basis and how it benefits people in community property states. We live in Nevada so that is a great plus for her because the gains were significant enough to exceed the $250K exclusion, even after deducting the expenses in connection with the sale of her primary residence. Again, thank you for this video. I hope others will find it as helpful as I did.

[@R.and.R.]

Great synopsis Andy. I was wondering how answering this fairly simple question would taken ten minutes. Now I know!

[@patzgcrux]

In the middle of closing my home, we don't fall into the 2 year residency but it is our primary home. I took a job in another state and from the info I gathered I qualify for partial exemption because of this based on publication 523 (2022). So the $500k usual exemption for married couples is partially realized by multiplying 17 months/24 months. Which lands our exemption to around $354K. All very useful information here thank you.

[@yesyoga]

HELPFUL! 👏🏼👏🏼👏🏼✅

[@jeffreyqiu5128]

Wow, thank you for the great intro into this topic

[@mustaennaim8395]

Hello, thank you for the video. I have a question, I bought the house on 9/15/2020 to 11/30/22, did I pass the test, just I am little confused about the 5 years. Does I still need to own the house for at least 5 years? Thank you so much.

[@rhampton1914]

I have a question and I hope that you can be of assistance. I purchase my condo in July of 2021 so technically speaking, I'm a little over 2 years. However, I am married but I've been separated. So I'm selling my condo with the hope of gaining at least maybe $70k or $80k. I am legally married, but I've been separated for about 10 years or so. Not legally separated,,,,,just separated with her address and of course my own address....So she has not lived with me at my primary residence at all. So if I sell my condo? And make $70k or $80k extra. Do I still have to pay this capital gain?

[@RetirementPlanningEducation]

You would have to file your tax return as Married Filing Separately (not Jointly) for the year of the sale in order for you to qualify for the $250k gain exclusion in this case. If you do Married Filing Jointly, you won't qualify for any gain exclusion since your spouse didn't actually live in the property. Check out IRS Publication 523 for more details: www.irs.gov/pub/irs-pdf/p523.pdf

[@RetiredAndHappy-]

Thanks Andy, great info! Let's say I replaced my roof for $10K, but it was because of hail damage, so my home owner's insurance reimbursed the full amount. Can I still count the new roof as an improvement and deduct $10K from the sale price?

[@RetirementPlanningEducation]

Hi. No, since it was reimbursed by insurance, it wasn't ultimately a cost out of your pocket (the annual premiums for insurance are, but that doesn't count). So it wouldn't add to the basis of the house.

[@PH-dm8ew]

Love your channel. I have asked this before on multiple channels. I understand for NJ i can claim the same 500000 exemption. However i need to pay the 8.97% (exit tax) which i get back when i file taxes. if i move out of state can i claim the 500000 exemption using the GIT/REP-3 form at closing and not pay the tax, or do i have to pay the almost 50000 in taxes and then file the A-3128 form to reclaim them. It seems so confusing and no two people answer this the same way. What is your take on it?

[@RetirementPlanningEducation]

I haven't personally been involved in a sale where someone was subject to the exit tax, so I frankly don't know the forms involved. To my knowledge, if you're not leaving the state, the exit tax doesn't apply and I don't think any tax will be mandatorily withheld upon the sale of the property. But if you are leaving the state, that's when the exit tax applies. And it's not an extra tax, it's simply the state making you pay the tax on the gain at the time of the sale instead of waiting to do it when filing your NJ return for that year. Sorry, I know this didn't answer your specific question!

[@PH-dm8ew]

@@RetirementPlanningEducation That the most thorough answer i have gotten from multiple experts. Thanks that gets me a few steps closer, to what i am trying to find out. Best regards and be well

[@shelleycharlesworth5177]

I'm 75 and my husband died 9 years ago- in 2014. We built the home I am still living in in 2009 for $1.5 million. Houses above and below me recently sold for $2.9 million. My home is bigger and nicer. If I sell for $2.9 million that is a gain of $1.4 million. I probably should have had an appraisal done right after losing my husband but I didn't. It was worth maybe $1.9 million then I am guessing. So I can deduct $250K from $1.4 million and that reduces the gain to $1,250,000 - correct? And I would have to pay gains tax on that?

[@andrewroth9175]

I just put a new roof on my 25 year old house. It’s a better quality roof wise then my old roof. Is that considered an upgrade? Which I then can add to my houses cost basis?

[@RetirementPlanningEducation]

replacing the roof is an improvement that would add to the cost basis of the house

[@BeeEl99]

Thanks for the valuable information. Bought my vacation home for $102,500 and just sold it for $320,000. I understand that only the primary residence qualifies for the exclusion, but can I put the gain in an IRA or something similar? I'm widowed as of Feb 2022.

[@RetirementPlanningEducation]

No, unfortunately the gain will all be taxable income in the year of the sale. If you held it more than 12 months, at least the gain will be taxed at the reduced long-term capital gains tax rates federally. And then you’ll also have to pay whatever your state income tax is, if any.

[@BeeEl99]

@@RetirementPlanningEducation I'll have had the property since 2014 and 'm in CA so I know I'll be taxed there. Thank you for the response! :)

[@mr.mcallister6502]

In order to get the married exclusion, will it still be allowed if each spouse files married and separate or do they have to file jointly?

[@RetirementPlanningEducation]

For married filing separately, the max exclusion is $250k. Check out Worksheet 1 in Publication 523: www.irs.gov/publications/p523

[@mr.mcallister6502]

@@RetirementPlanningEducation Thank you for the information. We will be filing jointly for sure..

[@ralphnabozny8494]

they get you coming and going; If I die in my house after 39 years do I pay tax on that too.. I hope not; I might be late.

[@RetirementPlanningEducation]

Your estate may have to pay tax, depending how big your estate is when you die and what state you live in (some states have punitive estate tax laws, other states don't have estate taxes at all). And whomever your heirs are likely won't have to pay tax on the sale of your house, assuming they sell it soon after inheriting it. But if they keep it and live in it for years and then sell it for more than what it was worth when you passed, yes, they may have have to pay tax on the amount of that gain.