Gain on Sale of House

[cwoods]

What is the name of your state? NH

Here is the story....so I was wondering if I have to pay gains on my sale. Technically I bought my house about 1.7 years ago. Well I found out I was having my first kid, so being a 2 bdrm, I needed a bigger house..so I sold the house....maybe a little too much background.

Now the closing company filled in a bunch of paperwork, one which states I have met the ownership and use test. Will this clear me from paying on the gains?

 

[Snipes5]

Yes, house being too small is a reasonable excuse to meet the partial exemption rules. You should be fine, unless you are selling a million dollar mansion.

Snipes

 

[cwoods]

How do I file using such an exemption? I want to do my taxes myself and not pay H&R again, since this year I have no basis to calculate on selling stocks.

I only made 22k from my house....so I am all set for partial exemption. Who makes the desicion if that is a valid reason?

I did get a 1099-S in the mail also.

 

[Rhubarb297]

What is the name of your state? NH

Here is the story....so I was wondering if I have to pay gains on my sale. Technically I bought my house about 1.7 years ago. Well I found out I was having my first kid, so being a 2 bdrm, I needed a bigger house..so I sold the house....maybe a little too much background.

Now the closing company filled in a bunch of paperwork, one which states I have met the ownership and use test. Will this clear me from paying on the gains?

Your responsibility to pay taxes is a personal responsibility. Just because the closing company incorrectly reported that you met the 2 of 5 year ownership test of your personal residence doesn't transform the fact you didn't satisfy that requirement into the fact that you did. Granted it's unlikely you would get audited thanks to the inaccurate information the closing company is reporting to the IRS, but it's always a good idea to follow the law.

There may be other ways to avoid the tax, but I'm not privy to all the details regarding your transaction nor is tax law my area of expertise. I would be careful of advice that appears to indicate that only owners of million-dollar mansions that sell have to pay tax on gain on real estate. That isn't true.

Couldn't you just have lived there a little longer? You would have saved yourself so much hassle and possible taxes.

 

[cwoods]

I could have, but it made sense to move at that time.....when she is a few months pregnant....not 8 months and ready to deliver. I would like to use this as a "unforseen" circumstance but who makes that decision?

The closing company sent them a 1099-S and I received it. Do they normally do that when you are excluded meeting the use and ownership test?

I really don't want to pay, it is a ridiculous law.....neverthless the law.

 

[Snipes5]

Moving due to not enough space is sufficent reason to meet the criteria for reduced exclusion.

It doesn't matter what the closing company told you.

It matters greatly that you received a 1099-S. You will have to list the sale on your return, it has been reported to the IRS.

Go ahead and take it to H&R, they will be able to do the forms for you, using the reduced exclusion for sale of main home.

I didn't say that ONLY owners of million dollar mansions need worry about capital gains.

I used my amazing powers of deduction to presume that since the OP was posting this on the internet, and not paying an expensive attorney, the profit on the house sale was far below the approximately $350,000 capital gains exclusion they will qualify for as a married couple, having lived in the house one year and seven months.

Snipes

 

[cwoods]

So is there any specific instructions on how to file the exclusion? Is there any proof I have to provide, paperwork, etc....besides including the sale and writing down the exclusion amount? I wanted to do my taxes myself this year and not pay H&R a couple hundred dollars.

Thanks for the advice!! Greatly appricated!