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  1. #1
    dyaboat0 is offline Junior Member
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    Indiana Capital Gains

    What is the name of your state (only U.S. law)? Indiana

    I am trying to understand the capital gain law on this situation:
    I had purchased my current home in Sept06 and had yet to sell my other home at time of purchase. I put my other home up for sale and had no luck after a couple of months. I agreed to a Lease Option to Purchase starting in Nov06. The lease Option to Purchase is now approaching the 2 year mark and possible default. My question is if I sale my non-resident home now after 2 years will I have to pay capital gains? My intentions was to apply proceeds of my first home toward my current home. Will I still be able to do this?

    Thanks
  2. #2
    LdiJ is offline Senior Member
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    Quote Originally Posted by dyaboat0 View Post
    What is the name of your state (only U.S. law)? Indiana

    I am trying to understand the capital gain law on this situation:
    I had purchased my current home in Sept06 and had yet to sell my other home at time of purchase. I put my other home up for sale and had no luck after a couple of months. I agreed to a Lease Option to Purchase starting in Nov06. The lease Option to Purchase is now approaching the 2 year mark and possible default. My question is if I sale my non-resident home now after 2 years will I have to pay capital gains? My intentions was to apply proceeds of my first home toward my current home. Will I still be able to do this?

    Thanks
    On a federal level, you have a 250k capital gain exclusion (500k if you are married) as long as the home was your primary residence for two of the last 5 years. Therefore, as long as your house sells before September of 09 you will have no federal capital gain, and therefore no federal capital gains tax.

    Indiana uses your federal adjusted gross income as its beginning point in determining your Indiana tax. Therefore, if something is excluded from your federal gross income, it will also be excluded from Indiana income.

    Therefore, if you sell the home before September of 09 and your capital gain (selling price minus purchase price minus cost of improvements minus selling costs equals capital gain) you are home free.
  3. #3
    tranquility is offline Senior Member
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    Therefore, if you sell the home before September of 09 and your capital gain (selling price minus purchase price minus cost of improvements minus selling costs equals capital gain) you are home free.
    A month ago this would be correct. Now, the home must sell before January of 09 or the changes to Section 121 will make the issue proportional. I haven't the law in front of me and certainly have not studied it enough to be sure, but if the sale is on or after January 1, 2009, the law is very different. There may be a requirment of a ((time lived in/time owned)*gain) calculation to figure the exclusion.
  4. #4
    FlyingRon is online now Senior Member
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    Fortunately only the non-qualified use after Jan 09 is prorated, so he gets a slight break there
  5. #5
    LdiJ is offline Senior Member
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    I had forgotten that the legislation passed, I just read about it a couple of weeks ago. However yes, only the use after January 1, 2009 factors into the calculation.

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