How do you pay taxes on a home sale?

[AC7179]

We got an offer on our house after it was on the market for four hours. Very happy and hoping it works out, but I was wondering on how I will pay taxes on selling the house. Surely I have to. Do I pay on the entire cost, or just my profit (what we're selling it for above what I paid for it?) Do taxes come out of closing costs, or income taxes for the next year? Anyone know?

 

[dis-happy]

Have long have you owned/lived in the house?

Are you single or married (with the house in both names)?


Basically, if you've lived in the house for 24 consecutive months and are married you get to keep $500,000 profit tax free ($250,000 if single). Of course there are caveats, but that is the basic info.

 

[AC7179]

Wow, thanks for the quick response.

I lived in the home for seven years. I bought it when I was single (in my name only) but got married about a year after I bought the home and am married now.

 

[golfgal]

It is highly unlikely that you will have to pay capital gains tax on your home. If you do, it is something that will be reported on your 2010 taxes. What did you pay for the house, what did you sell it for, how much money do you have into the house for repairs, etc. If that final number is less then $500,000 you don't have to pay taxes.

 

[corndog]

Relevant statute:

http://www.law.cornell.edu/uscode/26/usc_sec_26_00000121----000-.html

 

[manning]

Take the selling price of the home and subtract the original purchase price and improvement costs. If you lived in it the required time and married anything under 500,00 is not taxed (250,00 if you are single.)