Selling House - RV-Dreams Community Forum

macattack · RV-Dreams Family Member

Selling House

Howard · Host

Well Gregg, this is one of those questions I love to answer because the news is good for most people. smile

The short answer is I'm 99% sure you will not have to pay capital gains on any of your profit. smile

I can't be 100% sure because I don't have all the information.

For all that have this question, here is the deal.

For background, old laws stated that you were entitled to a one-time exemption of $125,000 of profit from capital gains if you were over 55 years old. That was to give some relief to older folks that might be downsizing. Otherwise, you had to "roll over" your profit into a new house to avoid capital gains in the year of sale.

But that all changed in the late 1990s. Effective for home sales after May 6, 1997 great new rules went into effect as follows:

Profit of up to $500,000 is now exempt from capital gains for married couples. It's $250,000 for singles.

You must have owned and lived in the house for at least two of the last five years prior to the sale.

You can sell as many houses as you want and take the exemption unlimited times except that the exemption is only allowed once within each two-year period. So as long as you haven't sold a home in the prior two years, it's not a problem.

Now, if you have used the home for business purposes and taken depreciation or home office or other business deductions, there is a recapture calculation that can get rather complicated.

That's it. So, unless Congress does something really stupid before you sell your house, it looks like you can use all your profit to buy your RV set-up without capital gains taxes. biggrin

macattack · RV-Dreams Family Member

Howard,thanks for the reply. I guess Congress doesn't always pass bills that take your money.

debken · RV-Dreams Family Member

YAY!! Good to know.