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If a personal home is sold for a profit, does that count as Income (and increasing AGI) on the 1040?

conifer
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If a personal home is sold for a profit, does that count as Income (and increasing AGI) on the 1040?

Maybe. Profit from selling real estate is generally counted as a capital gain, not ordinary income, so if you have held it more than 1 year and 1 day, it's taxed at a lower rate. Additionally, if it's your primary home, you may be able to exempt up to $500k/$250k (MFJ/Single) of profit from taxation if you meet certain requirements. See IRS Pub 523 https://www.irs.gov/pub/irs-pdf/p523.pdf

Please keep in mind, the 'profit' is not the money you receive at closing - you need to figure the profit based on the basis of the home, the selling costs, and the selling price, possibly along with other adjustments like depreciation recapture and proceeds from insurance claims. Pub 523 also covers those subjects.

AJ
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To clarify aj's comments and answer your question more directly, any gain from the sale of your home that is taxable WILL add to your AGI. If the gain is not taxable, it will not.

She correctly points out how to calculate the gain (and identifies a pothole to avoid), so pay close attention to that part.

--Peter
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Thank you both. I'm thinking of AGI because I currently receive a health insurance subsidy via ACA. If the AGI goes up from a home sale, I'll lose the subsidy. Not the most terrible thing, but it's a consideration. I'm 3 years from Medicare. According to link provided, I would not owe taxes on the profit. So, to be clear, my AGI would not go up from this capital gain home sale because I would not owe taxes on profit?

conifer
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According to link provided, I would not owe taxes on the profit.

Owing taxes on the profit and including it in AGI are two different things.

For ACA purposes, the important part is including the profit in AGI. Let's walk very quickly through the process.

1. Determine the gain on the sale of the house.
2. Determine the amount of gain which you can exclude from income. (That's the $250k/$500k you hear talked about frequently.)
3. If 1 is bigger than 2, you will include the difference in your income and, therefore, your AGI.

This is what you need to be concerned about for an ACA subsidy. But the tax return itself continues on to figure out how much tax you owe on the taxable portion of your gain. It's quite possible to have a taxable gain on the sale of your home, but to have no tax owed. (You could have deductions which offset the gain, or the gain could qualify for the 0% tax rate.)

--Peter
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The new taxes laws will change tax reporting for rentals. You may want the help of a tax professional for 2018.
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