Question about Captial Gain tax

4 Replies

I am planning on buying a SFH through FHA owner occupied loan, fixing it up and then selling it. How long do i have wait so i can sell it without paying the Capital Gain Tax and also how much is it for me to pay.

Thank you 

You'll need to both own and occupy it for 24 months to qualify for the 121 primary residence exclusion on the gain. 

Hi @Rahul Handa - you'd have to live in it for 2 out of the past 5 years in order to exclude a portion of the gain ... a single tax payer can exclude up to $250k, married couple up to $500k (Section 121 of the tax code).

The tax you'd pay if your gain goes beyond those limits will depend on the state the property is in and your personal tax bracket.  The Feds will charge you the long-term capital gains rate, but most states don't have a long-term capital gains rate so they treat it as ordinary income (I believe all but 9 states are this way).

Originally posted by @Brian Sparr :

Hi @Rahul Handa - you'd have to live in it for 2 out of the past 5 years in order to exclude a portion of the gain ... a single tax payer can exclude up to $250k, married couple up to $500k (Section 121 of the tax code).

The tax you'd pay if your gain goes beyond those limits will depend on the state the property is in and your personal tax bracket.  The Feds will charge you the long-term capital gains rate, but most states don't have a long-term capital gains rate so they treat it as ordinary income (I believe all but 9 states are this way).

 Thank you