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Don't think it's one time only, though there is a look-back requirement to make sure you haven't already used it on another home sale in the past two years.

If we're talking about the same thing. Mr.Vanvandenburg wrote 'credit', but I'm thinking of a capital-gain exclusion.

 

It is a tax exclusion according the irs. I wrote credit like credit on the tax owed. It only requires living in the home 2 years out of the previous 5 before the sale. I have a home I rent. If the tenant moves out, I may move in for two years and exclude 250,000 from the gain. Or I may not as if I die my daughter doesn’t have to pay any of the gain I owe taxes on, no depreciation recapture, nothing.
Wait if not a president should win, I think it’s unlikely given this week imo, one of his goals is to completely eliminate the inheritance tax. Now it’s 5 million tax free, maybe it went higher than that now. In his world you could make 10 billion in gains and heirs will not pay a dime. Everything resets to market value. Works great for him. Works great for Tesla guy. The middle people get to pay the bulk of the nations costs out of their weekly pay checks.

 

Yeah, I'm reading 'exclusion'. Up to $250k ($500k if married filing jointly) of cap gain can be excluded from your income. Then you calculate your tax the usual way, on what's left of your income after excluding that amount. How much tax that saves you depends on your bracket. It'll be some % of the excluded amount.

A credit directly toward the tax owed would be even more exciting, but isn't the deal.

 

For a single filer that sells a house for $250k, the tax savings start around $68k.

 

We also pulled out of vietnam. The only thing we wasted before that were tens of thousands of lives - on our side alone - when France pulled oyt of Vietnam we should have stayed out ourselves. The Vietnamese are happier without us & our intervention.
All of the Marxists now realize they can take over by simply running our universities & most of the media.
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Was that "sells a house for basis+$250k"?

 

An absolutely false equivalency.

That's saying that Europe was better under Naziasm and Eastern Europe was better under the Soviet Union.

Vietnam would have bee better if President Harry Truman did not allow France to reconstitute the French Indochina colonies after WWII.

Ho Chi Minh played the Star Spangle Banner and quoted the Declaration of Independence asking the US allies whom he fought under for independence.

Ukraine wants the same self determination that Vietnam finally secured.

 

yes sadly marxism via untold bloodshed.

 

Let's see here. War, buying selling houses... Ah! Yes, cars are becoming harder to work on. I can't fix the radio in my Avalon nor properly flush the brake fluid in it. That, and I have tire pressure sensor issues, especially because I have another set of rims. Replacing the bushings on the front sway bar was a pain. According to the instruction manual I was supposed to take out the engine and transmission in order to do it properly. Hopefully my suspension holds together.

All I can say is that overall, I hate new cars. They're practical, they're safer than ever, they pollute a lot less than older cars. But other than that, I don't know why people buy new cars. They're boring, expensive or impossible to work on, and all look the same. I guess other people's likes and dislikes are different than mine.

 

Sell the house for at least $250k.

 

If your basis in the house is $249k on the day you sell it for $250k, your capital gain will be $1k. You'll be allowed to exclude all of that $1k, but that isn't going to save you $68k in tax. Maybe a few hundred.

Now, if your selling price is at least $250,000 more than your basis in the house....

 

I also see know that the two year live at requirement means the tax rate will be at the long term capital gain, which is lower.

 

Not trying to pick the Nets but most people are paying 6% Commission ... termite ... roof/electrical/plumbing/septic inspections, Etc as well - that'll come off the gain over basis as well.

.

 

Not many seem to know that story about Vietnam. It looks like it would be a democratic republic like the USA today. I think I only read about it recently, or maybe it was on PBS. It is still fact, because “Oh PBS”will start.

Around here I will be way over the 250. Plus I took advantage of a 1031 exchange to buy this one, so basis is low, plus every year rented depreciation has to be repaid. Depreciation, another Gift from the government. Ok if you have a machine it loses value as it gets used up, but the powers in charge gave me depreciation on a usually appreciating asset. Building owners love it. Some people own a lot of buildings and resorts and stuff like that. They are being showered with tax gifts off their actually appreciating assets.
When I or they die, all that depreciation does not have to be paid back by the heirs. They start fresh. So if no inheritance tax at all, the gifts just keep coming down through the generations. My daughter gets the house at market value, can sell it and keep the whole amount tax free.

 

Likewise, the Middle East might have been different and might have been more peaceful, if the plan by T. E. Lawrence for Arab independence was allowed to happen.

Instead, Sykes-Picot carved up the region under Brutish-French influence that set the stage for the strife we see today. The British Balfour Resolution for a Jewish State didn't help either.

The unintended consequences of empire seekers like Putin's current war in Ukraine continue to set the "world on fire."

 

That is pretty much every house in my area. I really missed the boat on buying my own place and I will work and rent until I end up thrown into the street to freeze to death. Some realitives bought a house about 15 years ago for $60,000. Now you can't find a condo for under $300,000, and the absolute cheapest houses (normally condemned) are at least $500,000. Most houses for sale are in the millions. Another lady had bought a house not that long before the pandemic for $120,000, but now her home is worth 1.1 million. That's almost a 1,000% increase!

However, I'm not understanding what the $250,000 limit does? A person doesn't have to pay taxes on that or what?

 

Yeah, if you bought a house several years ago for $120,000 and sell it now for $1.1M, you've made a $980,000 capital gain (assuming you didn't do a lot of remodeling or stuff that added to the $120,000 you put in the house ... also disregarding the few years of depreciation to keep this simple).

That $980,000 capital gain is part of your income for this year, so you'll get to calculate tax on it.

One nice thing is, capital gain on an asset you held more than a year is taxed at its own rate, lower than your normal income rate.

The other nice thing is, if this house was in fact your place of residence for two of the last five years, and you owned it for two of the last five years, and you haven't done this with any other house in the last two years, then you get to exclude $250,000 of that capital gain, and only pay capital gains tax on the $730,000 that's left.

If you're a married couple filing jointly, you can exclude $500,000, and just pay capital gains tax on $480,000.

 

Capital gains are the profit made on selling the house. Got to pay taxes on that. The $250k to $500k we are talking about is a deduction to that profit for selling the house, if the person had lived in it for two years prior.

...and Chapman beat me.

The long term(asset held for longer than a year) capital gain tax brackets are 0%, 15%, and 20%. For that lady, the amount of the deduction spares her from paying 20% on it.
Capital Gains Tax Rates For 2023 And 2024 – Forbes Advisor

 

Also, if I'm not mistaken, the capital gains brackets work just like the other tax brackets, with each higher rate applying only to the portion above its rate breakpoint. So if you have a $980,000 cap gain, you don't pay 20% on $980,000; you pay nothing on the first $47,025, plus 15% on the next $471,875, plus 20% on the remaining $461,100. That's $163k in tax. I'm using the rates for a single filer.

But if the single filer met the residence requirements and can exclude $250,000, then the tax will be: nothing on $47,025, plus 15% on $471,875, plus 20% on $211,100. That's $113k of tax. $50k of tax saved.

Now, if the filer were married filing jointly, the exclusion would be $500,000, and also the rate breakpoints would be the ones for married filing jointly, so the tax would be nothing on $94,050, plus 15% on $385,950, plus 20% on nothing, so the tax would just be $57,893.

Assuming I had no brain farts in all that. And that this was the only long-term capital gain on the filer's return.