I have an investment property that I am going to sell in January of 2002. It was originally my primary residence. I have owned the prop since February of 2001. I am going to make a profit of aprox. 70k. How am I going to be taxed on this? Please help. I have looked at the IRS site and can't find what I need.Thanks!!!!
What will the rest of your 2002 tax return look like?Unless you expect to have capital losses [whether current or carryover] in 2002 to shelter the gain from the sale of your house, you should be making *other* plans about the sale. Since you will not have held [owned] the house for more than a year, the gain from its sale will be *short* term capital gain, and will be taxed as if it were ordinary income. That is, unless you have capital *losses* [short-term or long-term, they both work for this purpose] to shelter [offset] the $70,000 gain from the sale of the house. I'm happy you're making a bunch of money on the sale, but I **know** you don't want to give 40 or maybe even closer to 50% of the gain to the government!!!Project your taxable income for 2002, including the gain from the house, and including any current or carryover capital losses you'll have, and you'll see that you will save a *lot* of taxes either because you have a heckofalotof capital losses [for which I'm sorry] or by postponing the sale [settlement] of your house by a month or two. C'mon back.
Thanks for your help. It's hard to say what our 2002 tax return will look like. My wife is self employed as a Real Estate agent and my salary seems to be growing quite a bit each year. Which, thank God, is good, but makes it really hard to determine what our income is going to be. Thus, making it hard to plan for taxes. I was told that recently that we would pay taxes (on the house) based on the following equation: Sales Price - (base cost + acquisition costs + sales costs)= X and we would pay taxes based on what the value of X is. So, b/c my wife is the agent would it be better if she took the whole "profit" as her commission? Thanks for your help. Also how beneficial would it be to wait a month? Also, what do mean by making "other" plans about the sale? Thanks again for your help.
I have an investment property that I am going to sell in January of 2002. It was originally my primary residence. I have owned the prop since February of 2001. I am going to make a profit of aprox. 70k. How am I going to be taxed on this? Please help. I have looked at the IRS site and can't find what I needSince we do not know your tax bracket (not counting the sale), we cannot give aprecise answer. But think of this: If you are in the 28% bracket (before the gain on sale), you would save $5,600 by delaying the sale for one month. If you moved back in and stayed until your time in residence was two years, you would save close to $20,000 in federal tax (plus whatever you might owe your state.
What if that was my primary residence for the whole year and I then sold it? Would that make a big difference in my taxes? And I am in the 28% tax bracket.
Not unless Not unless you sold because of a change in locationof employment, or other major life event (which I will not try to explain here).
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