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Guest
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 Posted:
Mon Oct 17, 2005 5:59 am Post subject:
Selling home and another property, buying new home, adding w |
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I have about $200,000 in equity in my primary residence and
I own a lot of land worth over $50k. Both properties are
solely in my name as they were purchased before I was
married. I plan to sell both and move to another area and
use all the money to purchase a new home.
Will I still have to pay capital gains on the increase in
value on my land even thoug all the money I make from
selling it is going on my new residence?
If I add my wife's name to the new property would this be
considered a gift or be taxable in any way by the IRS?
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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<< The Charter and the Guidelines for submitting >>
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<< Copyright (2005) - All rights reserved. >>
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Arthur Kamlet
Guest
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| Posted:
Tue Oct 18, 2005 1:34 pm Post subject:
Re: Selling home and another property, buying new home, addi |
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<almondbury@aol.com> wrote:
| Quote: | I have about $200,000 in equity in my primary residence and
I own a lot of land worth over $50k. Both properties are
solely in my name as they were purchased before I was
married. I plan to sell both and move to another area and
use all the money to purchase a new home.
|
Why did you move?
How long did you own and live there as your main home?
Using the proceeds from selling to buy a new home has not
been part of the tax code since 1997.
| Quote: | Will I still have to pay capital gains on the increase in
value on my land even thoug all the money I make from
selling it is going on my new residence?
|
If you lived and owned the main home for at least 2 of the 5
years before sale, you can exclude the first $250,000 of
capital gains.
the rest of the gains will be taxed as capitalgains, with a
maximum rate of 15% for property held more than a year.
The land, if separate from the home, could be exchanged for
other land of at least that amount, if you want to go that
route, and defer the gain. Or if you sell outright, you
pay capital gains rates, long term rate of not more than 15%
if held more than a year.
If you take back a mortgage on the land, you recognize a
smaller amount of gain each year as you collect the
principal payments.
| Quote: | If I add my wife's name to the new property would this be
considered a gift or be taxable in any way by the IRS?
|
Gifts to your spouse are not taxable as gifts or as income.
__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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Herb Smith
Guest
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| Posted:
Tue Oct 18, 2005 1:34 pm Post subject:
Re: Selling home and another property, buying new home, addi |
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almondbury@aol.com wrote:
| Quote: | I have about $200,000 in equity in my primary residence and
I own a lot of land worth over $50k. Both properties are
solely in my name as they were purchased before I was
married. I plan to sell both and move to another area and
use all the money to purchase a new home.
|
What you use the money for is irrelevant. Deferral of gain
into a new primary residence went away 8 years ago. Current
tax law either allows an EXCLUSION of gain on your primary
residence (up to $250,000 single or $500,000 if filing MFJ
and spouse meets occupancy condition) or payment of capital
gains tax (investments and/or nonqualifying residence).
| Quote: | Will I still have to pay capital gains on the increase in
value on my land even thoug all the money I make from
selling it is going on my new residence?
|
Absolutely. Long term gain (greater than one year) is taxed
at a maximum of 15%. Using the money to buy a new residence
or investment property has nothing to do with it.
| Quote: | If I add my wife's name to the new property would this be
considered a gift or be taxable in any way by the IRS?
|
No. Transfers between U.S. spouses are allowed on an
unlimited basis, without consideration of gift tax laws.
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
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| Back to top |
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Bill
Guest
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| Posted:
Tue Oct 18, 2005 1:34 pm Post subject:
Re: Selling home and another property, buying new home, addi |
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almondbury@aol.com wrote:
| Quote: | I have about $200,000 in equity in my primary
residence and I own a lot of land worth over
$50k. Both properties are solely in my name
as they were purchased before I was married.
I plan to sell both and move to another area
and use all the money to purchase a new
home.
|
"Equity" is not a tax issue. The question is, what was your
_cost basis_ for your primary residence? Assuming it was
$250,000 _less_ than your sales proceeds (profit), you will
owe no tax in any event, if you have lived in that primary
residence for at least 2 of the past 5 years ($500,000 for
MFJ -- which applies even if you originally owned the
property alone).
| Quote: | Will I still have to pay capital gains on the
increase in value on my land even thoug all
the money I make from selling it is going on
my new residence?
|
What you are doing with the proceeds, doesn't matter from a
tax basis -- either for the land or the primary residence
proceeds. As noted above, you are going to have no tax due
unless your residence sale profit exceeds the limits. For
the land, if it is an unrelated parcel, you will have a
capital gain -- of unknown amount, since you don't report
your cost basis in this writing. It would be the
difference between your cost and the proceeds.
| Quote: | If I add my wife's name to the new property
would this be considered a gift or be taxable in
any way by the IRS?
|
This is a needless maneuver, if you're filing MFJ or have a
gain of $250,000 or less from the sale of your principal
residence. The land wouldn't be affected, in any event.
Bill
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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