Posted by
dondi stephens

When I sell my current home for more than I owe, will I have to pay IRS

My current home is worth almost $200,000 more than I owe. I am wanting to sell and purchase a new home. Will I have to pay Capital Gains? Or if i reinvest the money in a new home does that stop the capital gains? if so how long do I have to reinvest the money?

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When I sell my current home for more than I owe, will I have to pay IRS

By dondi stephens   
Posted on May 03, 2021 in Topic: Home Buying
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My current home is worth almost $200,000 more than I owe. I am wanting to sell and purchase a new home. Will I have to pay Capital Gains? Or if i reinvest the money in a new home does that stop the capital gains? if so how long do I have to reinvest the money?
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Asked by: Consumer
Posted: 2 months ago
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James Meador
about 1 month ago
Hi Dondi!

This is a great question! You may or may not have to pay taxes on your capital gains when you sell your house. If you fit the following criteria, you should not have to pay taxes on your capital gains.

In Texas, you are allowed to make up to $250,000 in profit if you file your taxes individually or up to $500,000 in profit if you file your taxes jointly (or as head of household) without paying capital gains taxes, as long as you meet all of the following criteria:

-The property must be your primary residence
-You must have owned the house for at least 2 years
-You must have lived in the house for 2 of the last 5 years
-You cannot have claimed exemption from capital gains on another property in the last two years

If you meet all these criteria, you should not have to pay taxes on your capital gains. However, you WILL have to pay capital gains tax on amounts OVER $250,000 if filing individually or $500,000 filing jointly even if you do meet all these criteria.

Also, the capital gains tax doesn't have anything to do with how much you owe on the property, it has to do with how much you paid for the property when you bought it.

I hope this helps!

If you would like to talk more about this or about selling your home, please call me or send me a text! My wife and I would love to help you and now is a GREAT time to sell!

James Meador and Vanessa Esma
The Stellar Home Group
Re/Max 5 Star Realty
281-450-7199


about 1 month ago
Silver
Pauline Clement
about 1 month ago
This is certainly an intricate matter. While we as realtors can't give legal or tax advice, I would say contact an accountant and or an attorney. Best wishes getting this sorted out.


about 1 month ago
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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