Do I have to pay taxes on real estate profit after owning a residential property for over two years?
A real estate agent told me that I did not have to pay taxes after I owned a property for over two years. Now that I have sold the property I am ready to file taxes and I am afraid that I have to pay a fortune in taxes. I owened the property for 3 years and it was the my main residence. Can anyone tell me if this real estate agent was wrong.
Public Comments
- wrong
- If you are under 55 he was wrong. If you buy another house for the same amount or more you wont have to pay taxes. 55 or older you can keep it all one time if it was your main resident. Your agent wanted a commission always consult with a tax lawyer on matters like this.
- Rocky S is telling you about the old rules, and they haven't been in effect since a few years back. If you owned the property for two out of the previous five years, and lived in it as your main home for two out of the five years immediately prior to the sale, you can exclude up to $250,000 gain ($500,000 if married filing joint), as long as you didn't sell more than one home during the two year period ending on the date of the sale. If you made more than that amount, then you'd pay taxes on the excess, but the first $250K/$500K of profit doesn't get taxed. So you should be OK unless you had a HUGE gain. There are no age restrictions on this. The old rules had age restrictions, but those are gone. The above is for federal. State rules often follow this, but not in all states, so check on it if you live in a state that has state income taxes.
