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How can I reduce the taxable income from selling my principal residence?

April 19, 2004


Subject:  Federal and State Tax Consequences of principal Residence Sale
From:  Mark
Date:  Fri, 26 Mar 2004

My wife and I have lived in our home as our principal residence for six years and are now selling it for a net gain of $690,000. Are there any methods to avoid Federal and California tax consequences on the $190,000 in excess of the $500,000 exclusion?

Thanks again,
Mark

Answer

Date:  Fri, 2 Apr 2004

Hello Mark,

The $190,000 is a taxable long-term capital gain. Remember the federal tax rate for this will only be 15%. If you have any investments that you can sell for capital losses, sell them this year and offset the losses against the taxable gain.

Good luck!
Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

How can I reduce the taxable income from selling my house?

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