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Using Her Exclusion |
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Dear Ms. Lank, The price of my house in the 1960s was $28,000. My husband is now deceased. I understand that I would be entitled to $250,000 capital gains tax exclusion on the sale of my house. I do not have a clear understanding of how the exclusion works.
My intention is to sell the property probably around $300,000 and purchase another property for less. I do have a $50,000 mortgage on my current home which would need to be paid off. I would incur also other expenses in salesman fees etc. I would pay cash from the proceeds for the new residence |
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The IRS is not interested in your mortgage payoff, and no longer cares whether or not you buy another home.
You figure capital gain by subtracting cost basis and some selling expenses from the sale price. Cost basis includes not only original purchase price, but also money spent on permanent improvements over the years. It may also have changed when your husband died, so I expect your taxable profit will be less $250,000, and thus free of income taxes.
A tax professional can be more specific |
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Edith
Originally published on April 6, 2006 |
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