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Based on some discussions with others, and the following exerpt from a Fool Article I have determined that I should not be required to pay CapGains tax on the sale of my home.

"The key to the entire plan is that you are allowed to sell a principal residence once every two years and exclude up to $250,000 ($500,000 for a married couple) of the gain on the sale."

I have lived in my home for (4) years, it is my only property, and my child would be forced to pay estate taxes if I were realize a $250,000 gain die to my massive heart attack.

The real question is will I have to pay income tax on the gain and at what rate? Any info would be appreciated.

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I have lived in my home for (4) years, it is my only property, and my child would be forced to pay estate taxes if I were realize a $250,000 gain die to my massive heart attack.

The real question is will I have to pay income tax on the gain and at what rate? Any info would be appreciated


I'm not quite sure what you're asking, since the capital gain exclusion has nothing to do with estate tax, and if someone inherits your house, it comes with a basis of the fair market value as of the date of your death.

If you sell a home that has been your principal residence for 2 of the 5 years immediately preceding the sale, you can probably exclude $250,000 of gain. See Publication 523 for the "ifs" and details.

Phil Marti
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Sorry for the confusion. The estate tax comment was an attempt at humor.

The question is:

Even though I will get a capital gains exaption on the proceeds from the sale of the house, will it those proceeds affect the income tax I am forced to pay, either in increased income or higher tax rate?
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Even though I will get a capital gains exaption on the proceeds from the sale of the house, will it those proceeds affect the income tax I am forced to pay, either in increased income or higher tax rate?

No. The excluded gain never even makes it into gross income on your return.

Phil Marti
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No, unless your gain is more than the exclusion amount, inwhich case it would be a good news bad news situation.
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