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  1. #1
    Eruption valdez44's Avatar
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    12.14.12 @ 08:13 PM
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    Default So, who's an expert on Taxes?

    check it out....here's my question. My wife and I recently sold our condo, and made a nice little profit. With the money we made we bought a house, but kept about 70 grand in the bank to pay off our cars, buy new furniture etc. etc.

    So, will we be taxed on that 70 grand that we have sitting in the bank? I'm thinking more than likely so. If so, anyone have an idea how much? We don't want to get ourselves in a bind where we'll end up having to pay taxes, you know what I mean?
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    Romeo Delight
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    yes, you will get taxed on it since it didn't roll over into another real estate investment.

    i believe, not sure, the amount depends on your tax bracket...i would count on at least $15-20K.

  3. #3
    Atomic Punk Van Squalen's Avatar
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    Quote Originally Posted by valdez44
    check it out....here's my question. My wife and I recently sold our condo, and made a nice little profit. With the money we made we bought a house, but kept about 70 grand in the bank to pay off our cars, buy new furniture etc. etc.

    So, will we be taxed on that 70 grand that we have sitting in the bank? I'm thinking more than likely so. If so, anyone have an idea how much? We don't want to get ourselves in a bind where we'll end up having to pay taxes, you know what I mean?

    If it was your primary residence, and you lived there for at least 24 months, you and your wife, if you file joint tax returns, can take a capital gains exemption of up to $500,000, and not be taxed whatsoever. Single tax return exemption, up to $250,000. Anything above and beyond that, regardless of how much you held back/put into the new residence, will be taxed at the current capital gains rate of 15%.

  4. #4
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    Quote Originally Posted by Van Squalen
    If it was your primary residence, and you lived there for at least 24 months, you and your wife, if you file joint tax returns, can take a capital gains exemption of up to $500,000, and not be taxed whatsoever. Single tax return exemption, up to $250,000. Anything above and beyond that, regardless of how much you held back/put into the new residence, will be taxed at the current capital gains rate of 15%.
    Squalen beat me to it. I'm about to sell a condo which was my primary residence for 4 years. VS has this one right...
    Can't stop...addicted to the shindig...

  5. #5
    Eruption valdez44's Avatar
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    thanks gentlemen! It sounds too good to be true. I hope you'all are right though. Nonetheless, we plan on saving a good chunk just in case we have to pay the "man".
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  6. #6
    Atomic Punk Van Squalen's Avatar
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    Quote Originally Posted by valdez44
    thanks gentlemen! It sounds too good to be true. I hope you'all are right though. Nonetheless, we plan on saving a good chunk just in case we have to pay the "man".
    Dude, it's fact. All you have to do is hit the IRS home page if you need further investigation or verification, or ask an accountant. Capital gains are fairly self explanatory. If you made 500k or less on your condo sale (the amount of difference between your purchase price and your sale price), and you and your wife share the title and file joint returns, then you won't have to pay tax. Capital gains are taxed differently than your regular annual income.

  7. #7
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    Their right, if you owned the home for 24 month's and it was your primary residence the money you make off the sale is tax free up to a certain amount. I was a VITA dude for 8 years if that helps any.

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    Well, Texas was originally part of Mexico, and the.....oh, wait. TAXES...ok, got it. i have no idea about taxes, excepth that i got a letter from the IRS last week telling me im eligible for the EIC. and i dont have kids....either way, theyre giving me about 3 grand back.
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  9. #9
    Baluchitherium KT's Avatar
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    Quote Originally Posted by sisca
    Well, Texas was originally part of Mexico, and the.....oh, wait. TAXES...ok, got it. i have no idea about taxes, excepth that i got a letter from the IRS last week telling me im eligible for the EIC. and i dont have kids....either way, theyre giving me about 3 grand back.
    The first TWO times I read that thread title I was thining, "Well, I am...I've lived here all my life. How can I help?" HA...
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  10. #10
    Eruption valdez44's Avatar
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    12.14.12 @ 08:13 PM
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    Quote Originally Posted by Van Squalen
    Dude, it's fact. All you have to do is hit the IRS home page if you need further investigation or verification, or ask an accountant. Capital gains are fairly self explanatory. If you made 500k or less on your condo sale (the amount of difference between your purchase price and your sale price), and you and your wife share the title and file joint returns, then you won't have to pay tax. Capital gains are taxed differently than your regular annual income.
    cool... I just spend some time at the irs homepage, and everything looks Kool in the gang!
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  11. #11
    Atomic Punk Van Squalen's Avatar
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    Quote Originally Posted by valdez44
    cool... I just spend some time at the irs homepage, and everything looks Kool in the gang!
    Don't forget, to qualify for the tax exemption you have to have lived there for at least two years.

  12. #12
    Eruption distortion9's Avatar
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    Default So , who's an expert on Taxes?

    Me....they blow.

  13. #13
    Casting Shade
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    Quote Originally Posted by Van Squalen
    If it was your primary residence, and you lived there for at least 24 months, you and your wife, if you file joint tax returns, can take a capital gains exemption of up to $500,000, and not be taxed whatsoever. Single tax return exemption, up to $250,000. Anything above and beyond that, regardless of how much you held back/put into the new residence, will be taxed at the current capital gains rate of 15%.
    Squalen is 100% dead on. And it doesn't even have to be the last 24 months. As long as both you and your wife lived there for 2 out of the last 5 yrs, not necessarily at the same time, you can take a $500k exemption on the capital gain, as long as you file jointly. If only one of you fulfills the 2 out of 5 yr criteria, then you get a $250k exemption.
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    Casting Shade
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    An addition...even if you haven't lived there for 2 yrs, I'm fairly certain that the gov't does allow some kind of a % exemption, just not the full amount.
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  15. #15
    Atomic Punk Van Squalen's Avatar
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    Quote Originally Posted by LoveWalkinIn
    An addition...even if you haven't lived there for 2 yrs, I'm fairly certain that the gov't does allow some kind of a % exemption, just not the full amount.
    I don't think so. Of course, it depends on how much the auditor board wants to check for precise primary residence time applied to the property.

    But yes, it doesn't have to be THE LAST two years, but since you've owned it, you have to have lived there and claimed it as your primary residence at some point for at least two years.

    Now there's also the 1031 exchange, but that applies to rental/investment properties only, not primary residences, wherein you could put all your gain into the next investment property and not get taxed on it (any gain you held back from the transfer, would be taxed at the 15% rate). But that only applies to secondary properties. I do this all the time, it's how I pay my bills these days. But when I wanna cash out one or two of 'em to fill the bank account, I sell and I pony up the 15%/9% straight across, minus improvement and mortgage interest payment deductions.

    It's not like the good ol' days, where you could put ALL your gain into your new primary home without taxation. Well. At least the GOP gave us those nice quarter-half million exemptions. Most people don't make that much on their home sales, so it's still relatively a tax-free situation, depending on where you live and what market you're in.

    Unlike my market, which is ridiculously high, one of the highest in the nation. I just sold my primary residence, and I'm about to pay 15% on 200k, plus another 9% to the State of California, and that's AFTER my quarter million dollar gain exemption. To give you an idea how incredibly overpriced property has increased in Southern Cal, I purchased my home in 2004 and have made half a million bucks in equity in two years simply by sitting on it. Tempting just to marry somebody to avoid 40k in federal and state tax, LOL. Is 40k worth a marriage? Probably not. Don't weddings cost like 60k these days?

    Gotta itemize deductions and write-offs and hope it's not as much as it seems. Home improvements and charitable donations ought to bring it down some.

    *There's also STATE tax capital gain tax rates. Your state wants a cut too. In Cal, it's 9%. You can use the exact same write-offs and exemptions, but if your gain exceeds the standard 250/500k amount, bottom line is Feds are gonna take 15% and your State will take ___% depending on what their established capital gain rate is (it varies state to state, I believe).

    *Don't forget: assuming your gain exceeds your exemption, DO NOT wait until next year to send in a check for capital gains tax. Send your ESTIMATED tax on the gain right after the sale, via form 1040-ES, (estimate how much it is, including your projected write-offs and deductions for the rest of the year), or else you'll end up paying more money, 'cause escrow won't withhold the appropriate amount for the IRS, and the Feds wanna make the interest on your dough ASAP just like you do, and if you hold it back, they'll penalize you next year on your returns for the lost interest.

    BTW, I'm no tax expert, just a realty investor who learned about all this crap the hard way.
    Last edited by Van Squalen; 05.30.06 at 05:03 PM.

 

 

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