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Originally Posted by ellengk As we sell our current home and realize some capital appreciation, we want to withhold some money from our purchase so we can do some updating/addition to the new home. How does the calculation of tax liability work on this? Thanks! |
You may do that aslongas you sell your primary residence, you can make up to $250K($500K for MFJ)in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes to the iRS/state; even better, there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250K (or $500K depending on your filing status) every time you sell a home.
Note;s you can see, your home improvements/addition can lower your capital gains by increasing your home adjusted basis when you dispose of it later.