Property taxes and income taxes?

Question

I am over 65 and am thinking of selling my home. Will I have to pay income tax on the sale or may I simply put the $$$ towards another property and pay taxes only on what is left over? Also, I know I will be taking our property tax rate with us to the new house...should our current house not sell, will we have to pay prop tax on both houses for the same rate? Thanks!

Answer 1

You can exclude $250,000 ($500,000 if married) of the gain, provided you owned and lived in the house for 2 of the past 5 years.  You may take this exemption every 2 years, as long as each sale qualifies.

For property taxes, I assume you're talking about California Proposition 13 basis carry-over, per Proposition 60 and Proposition 90.  (If you sell your primary residence, and buy one of a lesser value, you can carry over the Proposition 13 basis to the new property.)  The carryover applies only if you "trade down"; if you buy the new house before you sell the old one, the purchase price has to be less than the sales price.  If after, but less than one year after, it can be up to 5% more.  If more than one year, but less than two years, it can be up to 10% more.  If you or your spouse is over 55, and neither of you has used the exemption before, and (proposition 60) the new house is in the same county as the old house, or (proposition 90) the new house is in one of the counties which has agreed to accept proposition 90 valuations, you can set the Proposition 13 basis of the new house to that of the old after you sell the old house.

Answer 2

Property taxes are separate from income taxes.  You'll have to pay property taxes on both houses as long as you own them.  Amount for each will be determined by the assessment on the house, and by the tax rate where the house is located.   Taking property tax rate with you to the new house?  Not most places, but your state might have unusual rules.

The rule about reinvesting gain, or special rules for being over 65, went out about 10 years ago.  The new rule is, for most people, better.  If you lived in the house for at least two of the 5 years right before the sale, and owned it for two of those same 5 years, you don't pay income (capital gains) tax on the first $250,000 of gain ($500,000 on a joint return).

Answer 3

The amount you can exclude from your income tax is $250,000 for a single person and $500,000 for married.  This is not a one time exclusion, it can be taken every two years as long as the home you are selling is the home you lived in for 2 years.  The telephone number in the answer above is correct for the IRS.

Sorry I don't know about the property taxes.

Answer 4

"taking your property tax rate with you to the new house."  I don't understand that statement.

Answer 5

You are entitled to a one time exemption on your fed tax from profits on the sale of your personal residence.  Call 800 829 1040 and they will explain this to you for free.