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Can anyone help me understand capital gains tax on house sale?

Can anyone help me understand capital gains tax on house sale?

Old Sep 26th 2009, 7:43 am
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Default Can anyone help me understand capital gains tax on house sale?

Hi all,

My DH is not too happy about the thought of having to pay the US government some unknown sum if we sell our UK house (primary residence) after he activates his IR-1 visa. Can anyone point me to some clear information about the circumstances in whcih this tax applies and how much it can be expected to be?

We've lived in this house for a long time (me five years, him fifteen) and have no other residence. We will be renting in America to start with. The $500,000 couple exclusion will not cover the total value of the house (fingers crossed on that one, it hasn't been put on the market yet).

Anything you can point me to will be helpful, thanks very much. I'll continue to search the forums.
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Old Sep 26th 2009, 8:51 am
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Default Re: Can anyone help me understand capital gains tax on house sale?

The $500,000 exemption is on the gain and not the selling price. So if the house is sold for $800,000 after expenses were deducted and you purchased it for $300,0000 including any upgrades (not maintenance), then there isn't any capital gains if you used it as a primary residence for 2 of the last 5 years.

http://www.irs.gov/publications/p523...blink100027560
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Old Sep 26th 2009, 9:30 am
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Default Re: Can anyone help me understand capital gains tax on house sale?

Is there anything saying that you won't get taxed if you use the gains to buy your next house? The house sale minus the original costs and improvements etc will probably be a little over $500,000, maybe $525k if we get the asking price. We're wondering how much tax we might end up paying on that extra bit - we'd be using nearly all of it to get resettled in America.

Can moving costs be deducted - for example the shipping container to get belongings across?

Last edited by avanutria; Sep 26th 2009 at 9:35 am.
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Old Sep 26th 2009, 9:54 am
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Default Re: Can anyone help me understand capital gains tax on house sale?

Originally Posted by avanutria View Post
Is there anything saying that you won't get taxed if you use the gains to buy your next house? The house sale minus the original costs and improvements etc will probably be a little over $500,000, maybe $525k if we get the asking price. We're wondering how much tax we might end up paying on that extra bit - we'd be using nearly all of it to get resettled in America.
No. Federal Income Tax is a maximum of 15% on the excess capital gains.
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Old Sep 26th 2009, 12:46 pm
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Default Re: Can anyone help me understand capital gains tax on house sale?

Thanks very much - that helps us determine what we might owe. I appreciate your help.
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Old Sep 26th 2009, 1:12 pm
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Default Re: Can anyone help me understand capital gains tax on house sale?

Originally Posted by avanutria View Post
Is there anything saying that you won't get taxed if you use the gains to buy your next house? The house sale minus the original costs and improvements etc will probably be a little over $500,000, maybe $525k if we get the asking price. We're wondering how much tax we might end up paying on that extra bit - we'd be using nearly all of it to get resettled in America.

Can moving costs be deducted - for example the shipping container to get belongings across?
Is your hope of $525K profit after the deduction of realtor fees, closing costs, etc. If so then it appears that you will pay 15% on 25K.

And yes, if the monies are used to purchase a home that you will be residing in there is no capital gains tax. It is on the IRS page that Michael linked you to.
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Old Sep 26th 2009, 6:25 pm
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Default Re: Can anyone help me understand capital gains tax on house sale?

Originally Posted by avanutria View Post

Can moving costs be deducted - for example the shipping container to get belongings across?
not from capital gains, but it can be reclaimed at tax time, but what you can claim is limited and the relocation has to be for work purposes.
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Old Sep 28th 2009, 4:56 pm
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Default Re: Can anyone help me understand capital gains tax on house sale?

Originally Posted by avanutria View Post
Can moving costs be deducted - for example the shipping container to get belongings across?
Yes moving expenses are deductible if you paid them yourself and weren't reimbursed for them by anyone else. Actually they are classed as a negative adjustment to income which helps if you are claiming other benefits or credits that are figured based on your AGI.

http://www.irs.gov/taxtopics/tc455.htmlhttp://www.irs.gov/taxtopics/tc455.html
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