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larrymo · 09-13-2020, 12:37 PM

Scenario – Purchase a MH in the same year the S&B is sold.

What is the tax implication from the sale of the S&B?

Old-Biscuit · 09-13-2020, 12:58 PM

Basically------
Real Estate Gains
When you sell a property in Texas, the profits, or capital gains, on that property equal the selling price of the property minus the original price that you paid for the property. If you buy a house for $100,000, for example, and sell the house for $150,000, you must declare the $50,000 difference as a capital gain for taxation. You can also, however, subtract any fees associated with selling the property, such as real estate agent fees, from the total profit. So, if you paid $10,000 to a realtor, you pay tax on only $40,000.

BUT 'Taxpayer Relief Act of 1997' allows owner to not pay taxes on sale of home provided:
"You're eligible for the exclusion if you have owned and used the home as your main home for a period totaling at least two years out of the five years prior to its date of sale."
Up to $250K/Single and Up to $500K/Married--filing jointy

Best info...your tax agent/CPA etc

Couple of informative articles
https://pocketsense.com/pay-state-ca...live-1335.html

https://www.thestreet.com/personal-f...state-14911957

momdoc · 09-13-2020, 01:10 PM

Sounds like a question for your accountant. Make sure you get the correct info.
And CONGRATS on the sale of the S&B

TXTiger · 09-13-2020, 01:28 PM

As Old Biscuit said, however you can also deduct the cost of any improvements your made to your home to get an adjusted basis. For instance you bought a house for $100,000, remodeled it at a cost of $20,000, now your basis is $120,000. You sell for 150,000. You only made a profile of $30,000 less $10,000 for the cost of the sale (realtor, escrow etc.) so your capital gains is only $20,000. If you have lived in the home for 2 out of the last 5 years you may take up to $250,000 (or $500,000 if filing jointly) of capital gains tax free. This is allowed only one time for life.

wontonthan · 09-13-2020, 05:34 PM

Quote:

Originally Posted by larrymo

Scenario – Purchase a MH in the same year the S&B is sold.

What is the tax implication from the sale of the S&B?

Just educating myself, but what is S&B?

Old-Biscuit · 09-13-2020, 05:37 PM

Quote:

Originally Posted by wontonthan

Just educating myself, but what is S&B?

Stick & Brick
House, dwelling, permanent structure where you live

wnytaxman · 09-13-2020, 05:42 PM

Quote:

Originally Posted by wontonthan

Just educating myself, but what is S&B?

Sticks and Bricks. Basically, your home base or permanent home.

It is rare that we find the sale of a principal residence results in any taxable gain. Take the cost of the home purchase, add in any closing costs on the purchase, then add in the cost of improvements (that number will probably surprise you), and the costs incurred on the sale. Subtract all of that from the sales price and see if you are over $250,000 single or $500,000 married filing jointly in profit. That will tell you if you have any taxable gain. All of this is assuming that the home has been your principal residence for at least two of the prior five years.

You do have to be aware of any business usage that you have had for your primary residence such as an office in home or periods of rentals. That can generate taxable gains. If you have no periods of business use or deductions then you should be able to put the numbers together to see if you have an issue.

SKP Kirk · 09-13-2020, 05:45 PM

For the IRS, it does not matter what state you happen to sell the house in. The IRS lets you exclude up to $250,000 of gain ($500,000 if married filing jointly) on the sale of your home — if you meet a few requirements. Most states go by that same rule, but you should check with your state laws to be sure.

BillJinOR · 09-13-2020, 06:11 PM

Quote:

Originally Posted by TXTiger

As Old Biscuit said, however you can also deduct the cost of any improvements your made to your home to get an adjusted basis. For instance you bought a house for $100,000, remodeled it at a cost of $20,000, now your basis is $120,000. You sell for 150,000. You only made a profile of $30,000 less $10,000 for the cost of the sale (realtor, escrow etc.) so your capital gains is only $20,000. If you have lived in the home for 2 out of the last 5 years you may take up to $250,000 (or $500,000 if filing jointly) of capital gains tax free. This is allowed only one time for life.

I must correct this ... it’s not once in your life you can do this many times as long as you meet residency requirements. You can do it every two years if I remember correctly. This is why you should consult a tax atty with questions .

https://www.nolo.com/legal-encyclope...exclusion.html
Many people sell there house every few years in real estate boom areas taking the gains tax free many times

kcdogger · 09-14-2020, 08:23 AM

Quote:

Originally Posted by Old-Biscuit

Basically------
Real Estate Gains
When you sell a property in Texas, the profits, or capital gains, on that property equal the selling price of the property minus the original price that you paid for the property. If you buy a house for $100,000, for example, and sell the house for $150,000, you must declare the $50,000 difference as a capital gain for taxation. You can also, however, subtract any fees associated with selling the property, such as real estate agent fees, from the total profit. So, if you paid $10,000 to a realtor, you pay tax on only $40,000.

BUT 'Taxpayer Relief Act of 1997' allows owner to not pay taxes on sale of home provided:
"You're eligible for the exclusion if you have owned and used the home as your main home for a period totaling at least two years out of the five years prior to its date of sale."
Up to $250K/Single and Up to $500K/Married--filing jointy

Best info...your tax agent/CPA etc

Couple of informative articles
https://pocketsense.com/pay-state-ca...live-1335.html

https://www.thestreet.com/personal-f...state-14911957

When did Texas start taxing capital gains? Texas has no personal income tax, and that is what capital gains from the sale of a personal residence would be, personal income.

Ljwt330 · 09-14-2020, 08:31 AM

Quote:

Originally Posted by kcdogger

When did Texas start taxing capital gains? Texas has no personal income tax, and that is what capital gains from the sale of a personal residence would be, personal income.

The taxes discussed are federal capital gains taxes, collected regardless of where the property is sold. The mention of Texas in the quote is just a locator for the transaction because the OP is from Texas. If the house was sold in Texas, federal capital gains tax is possible.

kcdogger · 09-14-2020, 10:44 AM

Quote:

Originally Posted by Ljwt330

The taxes discussed are federal capital gains taxes, collected regardless of where the property is sold. The mention of Texas in the quote is just a locator for the transaction because the OP is from Texas. If the house was sold in Texas, federal capital gains tax is possible.

I was responding to a post that seemed to indicate there would be tax owed in Texas, which was incorrect information. No matter how much capital gains you have, irrespective of the source, Texas will not be due any tax.

larrymo · 09-14-2020, 12:32 PM

OP here. Great feedback. Thanks.

TXTiger · 09-14-2020, 01:15 PM

BillJinOR you are correct. 26 USC 121 states that you can use the exclusion as long as you did not use it within the last 2 years. The law may have been changed because I was told years ago that you could only use it once in a lifetime. Thanks for correcting me so as not to mislead anyone.