Has capital gains tax law changed regarding living in a home for 2 years and being able to sell w/no tax owed?
355256
At this point, no.\n\nI think your understanding of how it is handled is incorrect.   Assuming you use the house as your personal residence for two of the last five years, you can deduct up to $250k of capital gain if you file anything except MFJ.  If you file MFJ, then you can deduct up to $500k.\n\nIf your basis is $500k, file single, and sell the house for $750k, the gain isn't taxable.  Any amount over $750k would be taxed as long terms capital gains.
396013
There are a number of questions that would have to be answered before anyone could really give you advice on this.\n\nAre you definitely moving in 2 years?  When you move, will you sell the condo or rent it out.  Do you have a systematic savings plan right now?  Is your interest rate you're paying now fixed or variable?\n\nIf you are currently saving toward a down payment and are sure you'll have enough when the time comes to move, then it's fine to pay extra toward your 2nd mortgage.  Also, if your moving in 2 years is uncertain, then I would think about paying extra against the mortgage. \n\nHowever, if you are not currently saving toward a down payment, or if you are but you're not sure if you'll have enough, then I would contribute toward that savings instead of extra against the mortgage.  You want to make sure you have saved enough because you have no idea what the real estate market or interest rates will be like in 2 years.  The condo market may crash again like it did in the 80's.  It's always better to have the cash set aside.  It gives you more options down the road.
976939
YOU MAY WANT TO READ THIS ANSWER -- THE OTHERS ARE WRONG !!!\n\nYes, your understanding is correct that when you convert a rental property into a principal residence there may be capital gains consequences.\nIf you have never lived in this property but are contemplating doing so, what you need to do in order to determine whether there is a gain is to obtain a current "fair market value" of the property. In your case, you will want as low a value as possible, so get it appraised or ask a real estate agent to give you a potential selling price given the area, market values, and condition of house (so get this done BEFORE you make any repairs).\nTo determine if there is a CG : take the current FMV and subtract from it the price you purchased the house for (example....if you bought it for 80K and it is valued at 96K when you move in...then your gain is 16K) but from this 'gain' you get to subtract any costs or outlays you incurred (these include legal bills to purchase the property + land transfer taxes + appraisals + capital improvements to the property that were never expensed such as new furnace or new roof or new appliances etc....) so to continue the example...if these totalled 12K, then your CG would now be 16K - 12K = 4K...so you would need to pay tax on HALF of this gain or 2K. The tax would be whatever your tax rate is for your income level x 2K (21%, 31%, as high as 46%).\nIf your CG is actually negative, then there is NO tax owing as there is NO capital gain.\nAlso, here's a small but significant point, if you have not been claiming the rental income on your tax returns these past years, then you certainly would be foolish to all of a sudden claim capital gains.\n\nIn a nutshell, you will want to have as LOW a fair market value as you can currently, have as many outlays accounted for as possible (many of these will be found on the Statement of Adjustments from the lawyer at time of purchase -- also any bills for improvements) as these go to lessen the 'actual' or deemed gain.\nAlso, if you initially did live in the house for a time and then converted to rental...then this may be of benefit as when you converted to rental (there is no CG as it was primary residence) the FMV at that time becomes your ACB - Adjusted Cost Base, which you use to calculate the CG instead of the purchase price.\n\nAlso, be careful reading the advice some are giving -- they really sounded unknowledgable.
1170442
You have to pay taxes on gains over 250K for an individual or 500K in your case. In calculation of the gains you can also deduct all the improvements you made.\n\nYou do not have to pay any taxes if you lived in the house for over two out of five years prior to it's sale and your gains are less then stated above. So, sell now, and good luck.
125171
Yes.\n\nYour modified adjusted gross income is just adjusted gross income with some things added back in. And Capital gains are part of adjusted gross income.\n\nKeep in mind that real estate has special rules and although - to you capital gains are one number, the rules for figuring it out have little to do with reality. \n\nIf it was a rental property then you have depreciation to consider also if you used part of your home as a home office deduction, if you lived there you get a certain amount before you have to start counting it, if you didn't own it for long enough you will get screwed. If you do a 1031 exchange you can put off the whole thing until later. If you die the taxes can be avoided all together for those that inherit it if done right.
706662
You relative will have to qualify with the lender and pay an assumption fee. If the assumption fee, which is probably hefty, is more than the difference between today's rate and the 5.5% on a monthly payment for more than 2 years, then it might not be worth it depending on how long they plan to keep the property. Also, this relative will not be able to take the tax advantages unless the lender recognizes him as the borrower. Be aware, that selling to him on paper without the written permission of the lender will trigger a "due on sale" clause and he will have to get a new loan. Also, to protect yourself, you must make sure the lender completely removes you from all responsibility. In most cases, if the new borrower defaults, they can still go back on you, so get the removal in writing. If this relative is a first-time buyer, meaning he hasn't made a property purchase in the last 2 or 3 years, he should look into some of the first-time buyers programs that will give a reduced rate. A lot of mortgages say they are not assumable, but I think you will find that if you go to the bank, they will work with the relative.\n\nThere is another way, but it is complicated and you will want to speak with a CPA with regard to tax consequences for all parties. It is called a wrap around mortgage. I think you will still have to keep your name on the deed to the house, though, in order to not trigger the "due on sale" clause. Start with the bank and please don't try to circumvent them. It could blow up on you.  The difference between a 5.5% and todays rate is substantial, so he should try it.
4919
The have a few options... if the numbers work out then go for it. I believe,  that if your property was aquired from using a 1031 exchange, then you will have to hold the property for 60 months and live in this property for 24 months out of those 60 months to qualify for the tax exemption of gains up to 250k/ 500k if you are married and file joint returns. Depending on your need for the capital, liquidity, and when; would be the questions I would ask \nyourself. If it was me, I would look in to more real estate, maybe a 1031 exchange. What other investment can you not only cash flow from, but is a leveraged asset. Hope this helps.
81022
Here is the specific link you will need:\nhttp://www.irs.gov/publications/p523/ar02.html#d0e1931\n\nYou can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true. \n\nYou meet the ownership test.\n\nYou meet the use test.\n\nDuring the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home.
631114
Technically yes - but only on a proportion of the total gain.  The period relating to your living there is exempt from CGT, as is a further three years (based on an old assumption that it may take you a long time to sell).  There are further exemptions depending on your circumstances - eg if you are employed abroad or working away from your home town for certain periods.  It is more complicated if you own a second home as well, in which case you should get specific advice - or put more details on here and I`ll try to help!
451536
The normal exemption is $250,000 ($500,000 on a joint return).  However, there is a 2-year residency requirement.  If you have lived in the home for less than 2 years but are moving due to a change in place of employment, you may be entitled to a reduced exemption.  The reduction is proportional to the amount of time by which you fall short of 2 years.  So, if you satisfied 80% of the holding period, your exemption would be $200,000 (or $400,000).
1120802
If you sell your home in less than two years from date of purchase, you pay a 15% short term capitol gain.\n\nFrom your gross profit, you can deduct all costs related to the sale.\n\nI am with Realty Executives in Phoenix. If you want to contact me I will show you how yo maximize your profits and reduce your tax bill.
895813
If you lived in the property for ALL of 2002 and 2003, but not after that, then you'd have to sell by January 1, 2007 to qualify, since the specified time is two out of the five years prior to the date of sale, and 5 years prior to 1/1/07 is 1/1/02, the start of your two year period of residence.  So you're running out of time in about 6 weeks.  If you only lived there part of 2002 and/or 2003 but not after that, then you don't have the full two years residence so don't qualify.\n\nAs someone else said, the fact that you had converted it to rental property after that does complicate matters, and you couldn't exclude all of the gain if there is depreciation that you claimed or could have claimed.
1063555
I'm sure the laws vary from state to state. I live in Ky. and here you would be responsible for the property taxes on the home. If you're keeping the home you're not really selling it so there should be no sales tax. There will be a fee to transfer it into your name of course but with you being in Florida I can't even give you a ball park figure. It would be a good idea to call your local court house to get a better idea about things. I think the PVA office could give you the answers you need. (property value admin.)
53397
No she can't, if the property is her residence. The 1031 is limited to business and investment property.  But if she lived in the house 2 of the last 5 years, there is another Internal Revenue Code provision that shelters much or all of her capital gain, I believe it is 250K for a single person, 500K for a couple.
111045
You need to talk to your realestate agent and your accountant. There is a program that protects you from this tax. If you buy the new property within  2 years of the sale of the old property, you pay Capitol Gains Tax. It's called Property Exchange and you only pay 25% capitol gains on the balance from one property to the other. Example: you sell for 50,000 and buy for 40,000, you pay capitol gains tax on 10,000.\n\nGood Luck!
140345
On April 25, 1991, the IRS issued deferred exchange regulation-Reg 1.1031(k)-1. \n\n"No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment if such property is exchanged solely for property of like-kind, which is to be held either for productive use in a trade or business or for investment" (1991 excerpt from the above reference IRC Section Reg 1.1031(k)-1.) \n\nThis tax code allows taxpayers to defer ALL of the capital gains taxes resulting from their sale of investment property, when they will, use a Qualified Intermediary & following the I.R.S. guidelines, use the money to buy more suitable investment property within 180 days of the close of their sale. \n\nThis means that you can reinvest the money you would otherwise have lost to capital gains tax if you will use the extra money to buy more investment property for the purpose of making more money. This can be done within and between all classes of real property anywhere in the USA. \n\nHere is a simplified example of the difference:\n   \nSelling Property Without Benefit of 1031:\n \nIf your Sale Price is:      $750,000\ness your Mortgage:          $450,000\nThis Leaves Equity of:      $300,000\n\nWith your Sales Price at:   $750,000\nand a Cost Basis of:        $250,000\nYou have a Taxable Gain of: $500,000\n\nAt the base Federal Capital Gain Tax rate of: 15%\n\nTaxes due:                  $ 75,000\nLeft for investment:        $225,000\n\nBut if you structure the deal as a 1031 Exchange:\n \nIf your Sale Price is:     $750,000\nLess your Mortgage:      - $450,000\nThis Leaves Equity of:     $300,000\n\nWith your Sales Price at:          $750,000\nand a Cost Basis of:               $250,000\nYou would have a taxable gain of:  $500,000\n\nHowever, since you will use all funds to purchase more suitable investment property, your taxable gain is: $0.00\n\nTaxes due:             $0.00\nLeft for investment: $300,000\nTax Savings:         $ 75,000\n \n(State taxes not included in the above)\n  \nThis is why 1031 Tax-Deferred Exchange is often cited as “The Best Tax Loophole Left.”
199429
I am pretty sure you have to live there for 2 full years to avoid being taxed on the capital gains.