How much money do you have to pay in taxes when you sell a house?
I am about to sell my house for 171 thousand. I am selling to a person for sale by owner. How much will I have to pay in taxes for selling. Could I sell the house for 140,000 and be given the other 31,000 as a gift?
July 28th, 2010 at 9:24 am
If the house was your primary residence for the last several years, then you probably qualify for an exemption for the first $250,000 and pay no tax.
If you do pay tax, the amount is determined by your gain ($171,000 minus whatever you spent to buy and improve the house), not by the total amount.
If the house is only worth $140,000, but the buyer is a family member who is giving you extra money because you are family, then the $31,000 idea could work, but the family member would have to pay "gift tax" on the $31,000, so no money would be saved. If the person is a stranger, you have to pay tax on all $171,000 (minus whatever you spent to buy and improve the house), not just the part that you decide to classify as the purchase price. Also, the person may have difficulty getting a mortgage if the numbers have been manipulated in the way that you suggest.
July 28th, 2010 at 9:24 am
If you want to get around capital gains, what will be the to taxed amount you have a few options.
1. you could sell the house for a symbolic amount of $1 dollar and the buyer gives you the rest in cash
2. you take your capital gain and invest it into a new property.
Either way i would advise to chat with an CPA and get detailed info
July 28th, 2010 at 9:24 am
The federal law stated that if you are single and living in the house for 24 months as a PRIMARY RESIDENCE ( your main house). You could gain up to 250K without paying tax (TAX EXEMPT).
July 28th, 2010 at 9:24 am
If you owned the house and lived in it as your main home for at least two of the five years just before the sale, you wouldn’t owe any tax on selling the house.
Trying to play around and pretend that part of the selling price is a gift would be tax fraud.