Home
Tax Articles
Tax FAQ
Introducing Our Firm
Our Services
Real Estate Taxletter
Need Help?
Other Websites
Site Map

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+

Will I have to pay capital gains on my townhouse?

February 18, 2004


Subject:  capital gains question
From:  Diane
Date:  Fri, 23 Jan 2004

Dear Mike,

In August, 2003, I sold the home that I lived in for the past 27 years. We bought it for $48,000 and I sold it for $275,000. I received net cash of $210,000 from the sale. I bought a townhouse in October, 2003 for $380,000, paying $180,000 down plus a mortgage. While the townhouse has potential, I think I have bitten off more than I can chew. I would like to sell it this spring and down size. Will I have to pay tax on capital gains, since I haven't lived here for two years?

Thank you,
Diane

Answer

Date:  Mon, 02 Feb 2004

Hello Diane,

Remember you have a cost or tax basis of $380,000 for the townhouse. After you pay the commission and selling expenses, you might not have any gain from the sale. If you do have a gain, it will be taxable. Be sure to have all of the facts for estimating the gain or loss. If you live in California, there probably be income tax withholding based on the total sales price. For this reason, you might want to wait until the end of the year to sell the house so you can recover overwithheld tax by filing your income tax returns shortly after the sale.

Good luck!
Mike Gray

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.

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.

Will I have to pay capital gains on my townhouse?

Home | Real Estate Taxletter | Articles | FAQ | Introducing Michael Gray, CPA | Need Help? | Other Links


Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128-4512
(408) 918-3162
Fax (408) 998-2766
email: mgray@taxtrimmers.com
© 2016
Subscribe to
Michael Gray, CPA's
Real Estate Tax Letter
!

subscribe
unsubscribe