"A capital gain is the profit you make when selling an asset - like stocks, bonds, or real estate- for more than you originally paid. The IRS taxes these profits as capital gains tax. When it comes to real estate: Short-term capital gains apply if you owned the property for less than a year and are taxed at your ordinary income tax rate."
"Selling a home often comes with excitement, but it also raises questions about capital gains taxes. A common question homeowners have is whether they have to pay capital gains if they sell their house and buy another. The answer depends on several factors, including whether the property was your primary residence, how much profit you made, and whether you meet certain IRS requirements."
Capital gains occur when an asset sells for more than its original purchase price. Short-term gains apply to property owned less than a year and are taxed at ordinary income rates; long-term gains apply to property owned more than a year and are taxed at 0–20% depending on income. Homeowners may qualify for a Section 121 primary residence exclusion that can substantially reduce or eliminate taxable gain. Investment properties are subject to different rules and often rely on 1031 exchanges to defer taxes. Maintaining records of purchase price, capital improvements, and selling costs helps lower taxable gain and supports IRS compliance. Eligibility depends on ownership, use, profit amount, and tax rules.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
Unable to calculate read time
Collection
[
|
...
]