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If I sell a real estate contract, is there a capital gains tax?

I sold my home 3 years ago.  The tenants have fallen way behind on payments.  My accountant told me if I took the house back and resold it, I'd be subject to a capital gains tax.  If I were to sell the contract, would there be a capital gains tax?
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August 30 2013 - US
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Answers (4)

Profile picture for user85671051
Mia culpa!  I shouldn't have used the term "tenants".  They are the purchasers of the house.  They've lived in it for a little over three years now. I sold it to them via real estate contract, and receive payments through an escrow company.  Since moving in they have begun remodeling the home, but now don't have the funds to complete it.  They are behind on payments and I could take it back at any time.  I thought about either helping them remodel it, so they could sell it, and we could all get paid; or selling the contract and licking my wounds.  Any advice is welcome.
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September 02 2013
Profile picture for wetdawgs
If you have "tenants", you've may not sold your home yet.  Are you owner financing or is it "rent to own"?     If you had it as your primary residence for 2 of last five years you may be eligible for the capital gains exclusion for your primary residence ($250k single/$500 k married).  
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August 31 2013
Curious, but would the 2 of last 5 years exclusion rule not apply since he lived in the house as his principal residence 2 of the last 5 years?

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August 31 2013
Yes there would be.  My background is in accounting, I used to work with CPAs.  Uncle Sam is going to get his chunk no matter what.  The day you rented the house out made it a capital asset (business property).  And if you are to sell any part of that, then you will face capital gains taxes.  And depending where you live it can be substantial.  For example, in California between IRS and state capital gains taxes you'll pay over 20%.  That's why you really need to track as many expenses as possible to reduce that! 
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August 31 2013
 
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