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March 25, 2022
Question

Do I owe capital gains tax on the sale of house? Have not lived there for 2 of last 5 years, made less than 250k profit, don't own another property, mail not sent there

  • March 25, 2022
  • 2 replies
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I have not owned any other properties and do not pay rent to live elsewhere.

2 replies

March 25, 2022

No, your gain can be excluded if it meets the following criteria:

  • You owned the home for at least two of the last five years
  • It was your main home for two years or more within the five years leading up to the sale
  • You waited at least two years between selling this primary home and excluding up to a $250,000 gain from taxes from a prior home sale. 

There is an exception if you were renting out this property while you were not living there. In that case, a portion of your gain would be taxable because it would be allocated to the business portion of your property. For example, if you lived in the property for five years, then rented it out the last three years, 37.5% of your gain would be considered a business gain and would not qualify for the main home sale exclusion. You would also have to recapture any depreciation you took while it was a rental. 

Carl11_2
Employee
March 25, 2022

The basic answer to your question is yes, you will pay capital gains on any profit realized from the sale of the property, since the property was not your primary residence for at least 2 of the last 5 years you owned it, counting back from the closing date of the sale.