Capitol gains tax?

[roostonu]

If my wife and I sell our house to buy an RV with the profits and become full timers, are the profits still subject to capitol gains or is the purchase of the RV considered a home?

[joelm]

ol' yeller wrote:
By all means, I plan on consulting with a tax professional when the time is near. I thought it was likely that I would have the tax year to sell and still claim the "married" exemption. I just appreciate this being brought to my attention while I can still plan for it.

Home prices have shot up incredibly here. With Microsoft, Nintendo, and Amazon being headquartered here, they are bringing well salaried people here from all over the world. It is amazing to me to think that our S&B has increased almost $500K in 7 years. My neighbors are selling their homes for cash with no inspections or contingencies. I know, that's just crazy. I think that going fulltime will help me keep much of that in my bank account and not go to the Federal Treasury. I'm going to need it as my DW's illness has drained our bank accounts.

Actually your basis should reset to the value on the day she passes. The $250K exemption is then applied to anything over the that basis

[ol__yeller]

By all means, I plan on consulting with a tax professional when the time is near. I thought it was likely that I would have the tax year to sell and still claim the "married" exemption. I just appreciate this being brought to my attention while I can still plan for it.

Home prices have shot up incredibly here. With Microsoft, Nintendo, and Amazon being headquartered here, they are bringing well salaried people here from all over the world. It is amazing to me to think that our S&B has increased almost $500K in 7 years. My neighbors are selling their homes for cash with no inspections or contingencies. I know, that's just crazy. I think that going fulltime will help me keep much of that in my bank account and not go to the Federal Treasury. I'm going to need it as my DW's illness has drained our bank accounts.

[PawPaw_n_Gram]

Talk to a tax professional.

My understanding is that if you were to sell in the tax year that she passes, you would still be married filing jointly. You don’t go to single until the next tax year.

But talk to a tax professional, which I certainly am not.

It is also my understanding that the capitol gains threshold is 500k of increase over what you paid for the house.

We sold my dad’s house after he passed and his ‘gain’ in value was below the threshold even though the sale price was over the threshold.

[BarbaraOK]

Remember, it isn’t that the house sells for $500K, but the PROFIT is above $500K. You get to subtract costs of remodeling, cost of getting it ready to sell, cost of selling, original purchase price, to figure out gain.

[ol__yeller]

Thanks for this discussion. It raised a concern for me. My wife is terminally ill. My plan was to sell the house and go full time after she is gone. House prices in our area have shot up a lot and we are pushing the $500K limit. If I wait until she passes, I'll have to pay Capital Gains on about $250K because I go from married to single. I'm not sure what to do but thanks for giving me something else to consider.

[roostonu]

TripleE wrote:
Having just sold a house (that was located in Calif if that means anything) and bought another house in Ohio, I can tell you on Federal taxes buying something new means nothing for capital gains. That was the way it worked a number of years ago. Now you sell your house, take the selling price from the original purchase, if the difference is greater than $500,000 (for a couple) you pay capital gains on the amount over $500,000. You can subtract some things like sales commissions and some major upgrade or repair costs, your tax person can tell you exactly what is deductible. It used to be that you could only take the capital gains exception once, now you take it on each house sale. Hope this helps.

Thanks for the first hand report. We won't be over $500k so that's good to know. I know it changes year to year but I'm just researching right now and listening to different experiences so I have some idea how it works and what questions to ask when and if we decided to do something this big.

[TripleE]

Having just sold a house (that was located in Calif if that means anything) and bought another house in Ohio, I can tell you on Federal taxes buying something new means nothing for capital gains. That was the way it worked a number of years ago. Now you sell your house, take the selling price from the original purchase, if the difference is greater than $500,000 (for a couple) you pay capital gains on the amount over $500,000. You can subtract some things like sales commissions and some major upgrade or repair costs, your tax person can tell you exactly what is deductible. It used to be that you could only take the capital gains exception once, now you take it on each house sale. Hope this helps.

[daveengstrand]

The best advice is to see a tax adviser. Having said that, an RV qualifies as a home if it meets the criteria as stated by monkey44. Also, buying another home, S&B or RV, can only be deducted from the profit of the one you sold for tax purposes if it's cost exceeds the sale price of your previous one. Assuming the one you sold was more than the RV you're buying, there is no credit. The $250,000 single/$500,000 joint applies. Again, see a tax adviser for the latest and correct info.

[roostonu]

Obviously I'm not making any life decisions based on answers from an RV forum. Just fishing around for full timer info. We've started thinking about the possibility of living full time in an RV. I try to think about everything I'm doing and how it would change if I lived in an RV. This was just a question that came up while I was cruising the forum.

[Ivylog]

RoyF wrote:
I looked at instructions for schedule 1040d for year 2017 -- don't know it this will still apply during this year. For 2017, if you lived in home for two years during the five years preceeding the sale, then you can exclude $250,000 of capital gain, or $500,000 if a joint return.

Actually Roy gave you very good "rv advice" for free. Yes, you need to find out if that exemption is still in the 2018 tax law.

[2gypsies1]

I think you need to visit a tax guy rather than asking on a RV site. 🙂

[dons2346]

RoyF wrote:
I looked at instructions for schedule 1040d for year 2017 -- don't know it this will still apply during this year. For 2017, if you lived in home for two years during the five years preceeding the sale, then you can exclude $250,000 of capital gain, or $500,000 if a joint return.

This is the way it works. Buying a motorhome or a towable doesn't reduce your taxes. You will pay capitol gains on anything over $500K

[rexlion]

There are no gains at the Capitol, only huge losses.

😉

[monkey44]

roostonu wrote:

RoyF wrote:
I looked at instructions for schedule 1040d for year 2017 -- don't know it this will still apply during this year. For 2017, if you lived in home for two years during the five years preceeding the sale, then you can exclude $250,000 of capital gain, or $500,000 if a joint return.

Thank you. We bought our hose 7 years ago and have lived in it the whole time.

We've never known anyone that lived in a hose? Couldn't resist 🙂

TO be recognized as a home, you need a toilet, a bed, AND some way to cook meals as well. If your RV meets those requirements, it qualifies as a home ... but also, as stated above a residence has multiple exclusions and deductions, including that exemption above.