September 3rd, 2008 categories: Interesting Tidbits
Here is the formula used to calculate the capital gains tax on a home that is now being occupied as a primary residence, but was previously non-owner occupied:
CAPITAL GAINS EXCLUSIONÂ =Â PROFIT FROM SALE OF HOMEÂ Â * NUMBER OF DAYS THE HOME WAS PRIMARY vs NUMBER OF DAYS THE HOME WAS OWNED.
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 So for example: I have owned my home for 4 years. However, I have only occupied it as my primary residence for the past 2 years. If upon selling my home my profit was $100,000 then here is the calculation to determine the percentage of my profit that is taxable: $100,000  * 730/1460 =   $50,000 Thus, $50,000 of my $100,000 in profit would be subject to the capital gains tax.
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What about the Taxpayer Relief Act of 1997?
That should allow a single owner up to $250,000 in profit (double that if you’re married) and not owe any capital gains taxes?
You only need to live in the home for two out of the five years before the sale.