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I sold my house and got ~$62K out of the deal. I've never sold a house before this and I don't know how taxes work. My mother-in-law told me that if I don't re-invest it in another house within some set amount of time, I'll owe like 50% in capital gains taxes. I know jack poo poo about this, so learn me please.
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# ? Oct 7, 2019 20:38 |
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# ? May 3, 2024 02:44 |
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Quick google says "lolwat?"quote:It depends on how long you owned and lived in the home before the sale and how much profit you made. To expand, there are a couple of things wrong with this idea. First, you shouldn't generally consider a primary residence as an "investment" and the IRS agrees for the purposes of taxation. There's that massive bit of padding I quoted up there to prevent you from having to pay taxes on the sale of a primary residence. Second, the system doesn't punish you for not buying another house when you sell. Imagine all the poor fuckers who want to downsize to a smaller house (they now owe a bunch of capital gains taxes under this idea that the money isn't "reinvested" into the next, probably cheaper house), or people who move from ownership to renting. Your MIL is speaking complete loving nonsense. Hoodwinker fucked around with this message at 21:06 on Oct 7, 2019 |
# ? Oct 7, 2019 21:00 |
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Agreed, MIL sounds like the kind of person who thinks you need to carry a balance to improve your credit score and cheers at a large tax refund.
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# ? Oct 7, 2019 21:10 |
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I love her and she is a wonderful lady. I'm glad to hear that her information was bad...yikes!
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# ? Oct 7, 2019 21:15 |
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Hoodwinker posted:Your MIL is speaking complete loving nonsense. It sounds like she is just thinking about a real estate investment 1031 exchange, and didn't know about the capital gains tax exemption for profits on a primary residence. Edit: and the 50% rate is obviously some Fox news bullshit too, but pretty much no one understands taxes anyway. quote:The term 1031 Exchange is defined under section 1031 of the IRS Code. (1) To put it simply, this strategy allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long another “like-kind property” is purchased with the profit gained by the sale of the first property. Droo fucked around with this message at 21:40 on Oct 7, 2019 |
# ? Oct 7, 2019 21:38 |
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We have a client who just sold their house and somehow forgot that they had 1031'd it a long time ago. Surprise, your basis is a few hundred thousand dollars lower and you're paying taxes on it all right the gently caress now! Whoopsie!
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# ? Oct 7, 2019 22:27 |
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She's just operating on old info. I'm pretty sure you used to have 2 years to re-invest capital gains on your residence or it got taxed. That or you had to choose whether to pay tax on it or roll it over into your new house. I think it was sometime in the 90's it was eliminated, or that's when they added the "no taxes on up to $250,000 ($500,000 per couple)" rule.
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# ? Aug 12, 2020 22:50 |
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# ? May 3, 2024 02:44 |
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1997.
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# ? Aug 12, 2020 23:03 |