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I recently sold and bought a house, and as far as I know I paid no taxes on it, and I am still deducting mortgage payments. I could pay off my mortgage tomorrow
by sulam 9y ago
I recently sold and bought a house, and as far as I know I paid no taxes on it, and I am still deducting mortgage payments. I could pay off my mortgage tomorrow (it's Sunday here, so I'd have to wait for my bank to open) but my accountant tells me that's a horrible idea.
- dman 9y agoHow long did you hold it? Where was the home located?
- sulam 9y agoI sold my primary residence after buying a new primary residence. California. Homes are heavily taxes if you don't live in them, to the above poster's point.
- DrScump 9y agoThen you face capital gains taxes if your home appreciated over your cost basis. Property taxes also apply to home ownership.
- timr 9y agoYeah, the parent is being willfully obtuse. Property taxes are taxes that you have to pay merely for holding your investment. Until this year, you could deduct those taxes up to your total federal tax liability (which may be what the parent is saying), but now you're limited to $10,000. Either way, it's a lot more burdensome than most investments.
- sulam 9y agoCapital gains didn’t apply because of the unique rules around primary residences — our new home cost more than the old. In fact it’s better than other investments in this particular way! Regarding property tax, yes, but dividends are taxed as well and you generally are going to pay capital gains in the specific situation I’m describing if you replace “primary residence” with “stock”. Primary residences with mortgages have better tax treatment, really. If it didn’t I wouldn’t have a mortgage.
- dman 9y agoI like to think of this as the Government encouraging you to pay more in recurring taxes by waiving a one time tax - you did end up increasing your exposure to the real estate market and your annual property taxes through this transaction.
- asahi23 9y agoIn the USA, if you live in your home for 2 out of the 5 years prior to selling, you can qualify to pay 0 capital gains tax up to 500k if you're married and filing a joint return (250k if single)
- DrScump 9y agoIn the USA, you would face capital gains taxes if your sales basis was greater than your cost basis.
- pragmatic 9y agoDo I have to pay taxes on the profit I made selling my home? It depends on how long you owned and lived in the home before the sale and how much profit you made. If you owned and lived in the place for two of the five years before the sale, then up to $250,000 of profit is tax-free. If you are married and file a joint return, the tax-free amount doubles to $500,000. The law lets you "exclude" this much otherwise taxable profit from your taxable income. (If you sold for a loss, though, you can't take a deduction for that loss.)
- DrScump 9y agoup to $250,000 of profit is tax-free You get that exemption once in a lifetime. (If you are married filing together, that's once for both parties.) If your profit isn't 6 figures, choose this option carefully.
- meritt 9y agoUnder current law, you can take the exclusion every two years: https://www.irs.gov/publications/p523#en_US_2017_publink10008998 https://www.irs.gov/publications/p523#en_US_2017_publink1000... Are you referring to the over-55-once-in-a-lifetime exemption that was replaced in 1997 with the introduction of the Taxpayer Relief Act? https://en.wikipedia.org/wiki/Taxpayer_Relief_Act_of_1997 https://en.wikipedia.org/wiki/Taxpayer_Relief_Act_of_1997
- sulam 9y agoThis is incorrect.
- Spooky23 9y agoNot since the 1980s.