Today TaxMama hears from Miguel in Arizona, who tells us, “I want to sell my condo. I have only been in it for a year. How much of a capital gain will I have to pay?”
Goodness, what question!
In the absence of all information, the best answer I can give you is – I haven’t a clue!
After all, after owning it for only one year, what makes you think you’ll have any profit at all in today’s real estate market? When you add your purchase escrow costs and your selling commissions and other selling costs to the price of your condo, is there still any profit at all?
But, if there is, your worst-case tax rate will be 15% of the gain to IRS, and whatever your tax rate is for Arizona.
Of course, if your income is relatively low, you might only owe IRS 5% if your regular tax rate is 10% or 15%.
(See the worksheet on page 10 of the Schedule D instructions http://www.irs.gov/pub/irs-pdf/i1040sd.pdf )
Heck, if you have a really good reason for selling the condo because you have to move over 50 miles for work-related reasons, or you have to sell due to unforeseen circumstances… you may not owe any tax at all.
You may be able to use part of your personal residence exclusion. Read the information in IRS Publication 523 about how to use at least part of your personal residence exclusion:
I do hope this helps.
And remember, you’ll find answers to lots of questions, about capital gains and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- TaxQuips :: The number ONE tax podcast online
- IRS Schedule D :: See the worksheet on page 10 of the instructions
- IRS Publication 523 :: How to use at least part of your personal residence exclusion