Really specific tax question

behsco90

Not sure if anyone here knows the answer to this, but I figured I'd ask here first before I pay someone to give me the answer....

I closed on my condo June 2013, so I have not owned it quite two years yet.  If I sell my condo and it closes before the 2 year mark, do I basically have to pay the full taxes on my "profit" or is it prorated?  Also how is it taxed? Similar to income tax, so if my profit is say $50k, then I pay taxes based on my income being $50k (plus my regular yearly income)?

I am really hoping I can sell it after my 2 years, but it's possible our HOA may go into litigation, then I'm stuck with cash buyers only....

I've googled this but have not found a complete clear answer. Thanks ladies!

photokitty

This should answer your question, page 10 & 11 in particular.
http://www.irs.gov/pub/irs-pdf/p523.pdf

behsco90

Thanks @photokitty, now I just have to figure out how much I'll have to pay.

jenna8984

I'm 98% sure that home sales can make up to 250k profit before being taxed. You make a chart of costs- what you paid for the property plus any improvements- that is your basis. f you sell for 50k above that basis there is no tax. If you sell fo 251k above that basis, you pay tax on the 1k.

photokitty

jenna8984 said:

I'm 98% sure that home sales can make up to 250k profit before being taxed. You make a chart of costs- what you paid for the property plus any improvements- that is your basis. f you sell for 50k above that basis there is no tax. If you sell of 251k above that basis, you pay tax on the 1k.

Only if you live in the residence for 24 months out of 5 years or meet other specific guidelines - that IRS sheet goes over it all. Fun stuff

jenna8984

Example- if you bought it for 100k and put 20k worth of updates like a new kitchen, then your cost basis is 120k. You can then sell for up to 370k before you are taxed.

jenna8984

photokitty said:

jenna8984 said:

I'm 98% sure that home sales can make up to 250k profit before being taxed. You make a chart of costs- what you paid for the property plus any improvements- that is your basis. f you sell for 50k above that basis there is no tax. If you sell of 251k above that basis, you pay tax on the 1k.

Only if you live in the residence for 24 months out of 5 years or meet other specific guidelines - that IRS sheet goes over it all. Fun stuff

oh, good call, I didn't know there was a time statute