We purchased our house just under two years ago so we will not be hitting the 2 out of 5 rule.
Question, if we sell it for 10k more than we bought it for, is the 10k the taxable piece or is it the 60k we will take home in equity we had in the house.
Posted by tatamillski
4 Comments
You would only pay on profit, but maybe not even that amount of your adjusted cost basis eats it up (improvements, realtor fees, etc)
It would be the 10k.
However, I agree with the other poster that you are probably missing some adjustments to your cost basis. You can deduct costs associated with buying and selling your home, plus you can deduct any major improvements you made while you lived there.
Chances are you don’t actually have a gain.
If income tax, then the 10k. Local tax is usually based on the sale price. The local tax is usually called a transfer tax.
It is $10k gain — the difference between what you paid and your selling price. Realtor commission and closing costs also reduce gain, as do your costs of capital improvements to the property.