Profile picture for SluggoGal

capital gains tax for first time seller

I think a first time seller must live in the home for 2 years out of the last five to be exempt from the capital gains tax.   My "time" runs out June 15, 2009.  Does the house have to be sold by that date, or could we be in escrow and still qualify for the exemption?   (House is in Utah.  I now live in CA.)

thanks for any advice!
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January 29 2009 - Orem
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Answers (4)

Profile picture for duneen
Yes, it is a drop-dead cut-off, so if you've been out of the home 3 years by June 15, that is last date you can sell and still obtain gain exclusion. Escrow will not qualify.

Yes, capital gain is computed after deducting all expenses of selling, including realtor commission and inspection costs. However, you can not deduct the cost of repairs required to sell the property, as those are considered a personal expense.
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March 03 2009
Profile picture for Suezboss
Does a realtor fee come off of the capital gains tax?  What "other" costs associated come off?  Lets say we only make a $20,000 gain on the sale of our house, and a realtor costs $18,000, do we only pay a capital gain tax on the $2000 tha tis left?
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March 01 2009
The IRS is very strict with regulations and you are still the owner until title has passed.  So sold is sold- in escrow (or under contract as we call it in the northeast) does not  meet that criteria. Of course you should consult a tax professional. The criteria is not meant to apply only to first time sellers, but to sellers of their principal residence.  No need to be a first time seller to take advantage of the capital gains exclusion. 
 
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March 01 2009
You should always contact a professional for tax advice. As I understand the rule, you must have owned and occupied the home as your primary residence for two of the last five years to qualify for the exemption. If you moved prior to the two year time frame you may be subject to a tax on the gain. Some of the costs associated with the purchase and sale may help offset any gain. Talk to your CPA or attorney and get the correct information regarding your personal situation. If you don't have one find one.   
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February 28 2009
 
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