Comments on: Paying taxes after selling condo new jersey?

By: Rush is a band

Rush is a band — Sat, 20 Feb 2010 16:37:59 +0000

Someone was feeding you a line of crap. They had no idea what they were talking about.

Taxes on property sales in the US are capital gains taxes. If you’ve held that property less than one year and have a capital gain (sales amount – purchase amount = capital gains) then you are taxed at ordinary income tax rates (which is why house flipping generated a lot of tax revenue for the government). Long-term capital gains tax rate is 15% (currently).

So, in your case where you owe $191,000 on a condo… If you sign a purchase agreement for $200,000 you will most likely pay a real estate agent 6% for selling it (which is $12,000) and another 1-2% in closing costs, let’s say 1% for simplicity sake. Now you have $14,000 of expenses. $200,000 – $14,000 = $186,000. You will have to bring $5,000 to closing to get out of the condo! Since you’ve technically lost money – you will not owe any taxes at all!

Owing $191,000 you will likely have to have a signed agreement to sell for ~$205,000 to $207,000 to break even. If you want to finally agree at $207,000 for sales price, you are going to have to list at ~$225,000 to haggle down enough to end up at $207,000. Does the local market support an asking price of $225,000? If that is overpriced for the area, no one will even come look at it!

good luck!

PS – back in 1996 tax law was changed. Prior to 1996 if you sold a house and bought one another in a short enough time frame you could defer your capital gains taxes until you sold your current house. After 1996 there is now a home capital gains tax exclusion. If you have lived in the home for more than 2 years you can exclude up to $250,000 of capital gains (for a single person) and up to $500,000 for a married couple. You can essentially do this every 2 years and 1 day if you happen to choose properties that increase in value that quickly.

So if you have lived in your condo for more than 2 years (or 2 years out of the last five years [owned it for 5 years, but rented it out for the last 3 years]) and got it for free somehow and had capital gains of $200,000 when you sold it – you still wouldn’t pay a dime of federal tax on it!
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By: Not I

Not I — Sat, 20 Feb 2010 16:18:59 +0000

You pay on the profit. If you bought the condo for 150k and then sell it for 200k. that is 50k profit Then you subtract the Realtor fee and closing costs from the 50k leaving ? Then you pay Federal and State tax on the remainder. So if your final profit is 30k that is the amount you are taxed on.
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By: steveko777

steveko777 — Sat, 20 Feb 2010 15:52:59 +0000

No you dont-unless you turned a profit that is considered in the Feds eyes…That would be considered a Capital Gain at that point-and can only be collected in a few years if you dont repurchase a property with your profit amount….
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Landlord

By: tro

tro — Sat, 20 Feb 2010 15:46:59 +0000

you don’t say what kind of taxes
depending on your overall total, you may or may not have any taxes to pay on it
and with Federal taxes if this was your home for at least 2 yrs and you haven’t sold another within that two yrs you have an exclusion of $500,000 if you are married filing jointly, $250,000, otherwise
this is on the gain you realized
you need to contact a tax person in your area, not ’someone’ who may or may not know the tax laws
you can possibly pay capital gains tax on Federal and state but you need to discuss this with a tax person
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