Will we have to pay capital gains if we sell our house?
January 16, 2006
Date: Wed, 07 Dec 2005
My wife and I have lived in our house just under 2 years. I've been offered a ministerial position that offers housing free of charge. We stand to make between $30,000 and $40,000 on the house in equity. Will we have to pay a capital gains tax?
We live in Alabama, if that matters.
Date: 12 Dec 2005
I'm only going to discuss the federal tax law in this response. If you wait to sell the home until after you have lived in it more than two years, you will qualify for a $500,000 exclusion, and no tax will result. Since you are moving relating to a change in employment (and assuming you are moving some distance), you should also qualify for a pro-rated exclusion because of your change in circumstances.
We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.
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