How does capital gain tax work on selling 1st house?

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We bought and lived in a house for about 1year before moving out of state for job reason. We later bought another house in the new state, while keeping the first house. It has been 2 years since then, and now we plan to sell the first house. The first house has never been a rental property. How does capital gain tax work when selling the 1st house? Thanks.

6 Comments
  1. Reply
    HepperSchepp
    June 26, 2011 at 10:13 am

    You can exclude up to about $ 250k most likely on the gain.
    Since your move qualified for an exception to the 2 year rule.

  2. Reply
    cajunbiggeorge
    June 26, 2011 at 11:08 am

    You can each exempt $ 250,000 from capital gains, or $ 500,000 total gain from the sale.

  3. Reply
    RayN-is-back
    June 26, 2011 at 12:02 pm

    The capital gain on the 1st 250,000 single $ 500,000 married,is omited But I think you must live it for two out five years But check that out unsure

  4. Reply
    efflandt
    June 26, 2011 at 12:35 pm

    Because you did not live in it for at least 2 years, you do not get the full exlusion. But because you moved for job reasons, you would get a pro-rated exclusion based on the percentage of days in 2 years that you lived in it. So even if you and your spouse each get about half of $ 250,000 gain excluded, your home would have had to have gone up in value more that the roughly $ 250,000 combined to owe any tax, and any tax would be at lower long term gain rates. If your home gained more than that in the past 2 years of declining real estate you can afford the tax.

  5. Reply
    v b
    June 26, 2011 at 12:53 pm

    If you have been trying to sell the house for the whole time, you might still qualify for the pro-rated $ 250K exclusion. If you have just put the house on the market, the IRS won’t accept it.

  6. Reply
    Judy
    June 26, 2011 at 1:43 pm

    Has the first house just been sitting there empty and unoccupied since you moved? Did you make a profit on it when you sold it?

    You didn’t live in it for the required 2 years to exempt gain up to $ 250K or $ 500K from being taxed. There is an exception for work related moves where you get to prorate the amount of gain that’s exempt, so you can probably use that and not have to pay taxes.

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