SALE OF 2 HOMES

Forum|Forum|2 years ago
May 26, 2023
2 replies
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I bought a house(A) in 2014 lived there for 4 years. I then bought a family camp at the lake when my aunt passed, I fixed it up and moved in 2017. I then left the house in town for the house at the lake full time. I sold House A this year and want to sell House B at the lake, so me and my husband can take the money and by a house in South Carolina. ( empty Nest !) Is this a bad move to sell both houses in the same year?

First house made 40k second house I for see 100k profit. if that matters.

Thanks for any help

Mike9241

house A you move out in 2018 or 19 so what was it used for from the date you moved out to the date sold?

we need to know more about house A to give you an answer.

***************

it seems house B was being used as your principal residence for at least 2 years before the sale and was owned by you, your spouse or both. as such the gain is below the home sale exclsuion so no federal taxes should be owed. state law may differ.

HOUSEHUNTINGAuthor

It was not a rental. I did let a family stay there for past year But no money changed hands. eventually they bought the home once they had their credit squared away.

Critter-3

On the first home you will pay cap gains taxes on what is now considered an investment property ... however the second home that you lived in for 2 out of the last 5 years the profit can be excluded. If a 1099-S is not issued then it doesn't even get reported if the profit was less than $500K.

Hal_Al

Employee

Q. Is this a bad move to sell both houses in the same year?

A. No. House B qualifies for the home sale exclusion. House A does not qualify for the home sale exclusion for two reasons: 1.You did not live in it during the required time period (2 out of the 5 years prior to sale) 2. you cannot exclude more than one home sale during a 2 year period.

The gain on house A is taxable at long term capital gain rates. It does not matter whether it was classified as investment property or personal use property. If it had been sold at a loss, the use would matter. It appears to be personal use property, and a loss would not be allowed.

You indicated that house A was sold to family. If you sold house A, for less that fair market value, you may be considered as having made a "gift of equity". If the gift portion is more than $17,000 ($34,000 if they are a married couple with joint ownership), a gift tax return may be required. "Gift Tax" is somewhat of a misnomer. Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html