Capital Gains and Property Sales tax

[laffnatu]

What is the name of your state?What is the name of your state?NC

Hey,
I am considering selling a commerical zoned house that we are using as our residence right now.( This my be TMI, just trying to cover all bases.) We have used this house for a rental property before. We moved back into it in April 2003We bought the house for $13,500 in 89 and have put $ into it for improvements. We are selling for $80,000 and plan to buy another. How can I find out if there are any penalties for selling and what the sales tax would be when we sell. This is the first house that we have sold and are not sure about the process. We have received bits and pieces of advice from friends, but don't want to rely on these tidbits of info. We did not have the house on the market. This is an offer from someone interested in developing land beside of us. We don't want to jump into a sale that isn't worth it.
Thanks for any advice.

 

[abezon]

You can exclude gains from the sale of your personal residence if you lived in and owned the home for 2 of the 5 years prior to selling it. You have about 18 months recently, so the question would be did you have 6 months of occupancy in 2000 or later?

If you qualify to exclude gains, you can exclude any profits from the sale except for any depreciation you claimed since 1997. Any depreciation claimed on the rental has to be recaptured as ordinary income. If you have not been depreciating the house, you still have to "recapture" the depreciation you could have claimed, UNLESS you can prove how much depreciation was actually claimed. You prove this by looking at your 1997-2003 tax returns & adding up the depreciation claimed on the house. (There may be other sources of depreciation, such as appliances. You only have to recapture the depreciation claimed on the house.)

If you do not qualify to exclude the gains yet, you can wait until you've lived in the house for 2 years before closing on the sale.

There are a couple situations where you can get a reduced exclusion, such as change in employment or medical necessity, but nothing in your post indicates they would apply.