How do I stay out of trouble with the IRS
I was recently laid off from my job because of cut backs after my wife and I had our first child. We just bought our first home and I have no job. Well here is the question my wife had a home before we married and I also had my own home as well. After we got married we bought another home together using just my wife information because I had already been informed that there was going to be a big layoff. The home was a foreclosure and needed some work. Our current loan amount $100.700 the home was appraised at $129.000 and two of the neighbors are moving and they both are selling for $165.000. We have only owned the home for 4 months and sense I am out of work I have been doing the repairs my self. We need some extra money because I am out of work so we would like to sell the home ASAP. But we do not want to get into trouble with the IRS because we might make a profit and don=t if that will be a problem with the IRS we don't know where or how to start. I would greatly appreciate any help.
I would like to do this full time but I have got to educate myself on the tax and business laws in my state
MANY THAT ARE BACKED INTO A CORNER BY ECONOMICS USE A TWO THREe RULE TO THEIR PROPERTY...
YOUR BEST BET IS TO SET UP AN AUCTION AND GET AT MOST TWO TO THREE OFFERS WITH A MINIMUM BID AND SET PRICE So YOU WILL NOT BE GIVING IT AWAY...
GOOD LUCK...
AT LEAST BEFORE THE US MARSHALLS STEPS IN AND DOES IT FOR YOU...
RichardMane,
I assume that the IRS reference in your post relates to the capital gains tax you would pay on your profit since you have not owned your home for two years.
Recently, the IRS has added language to the partial exclusion rules that relate to your situation. If a job loss forces you to sell your home because your income is not sufficient to meet your household expenses, you are eligible for a partial capital gains exclusion on the sale of your property.
If you and your wife file a joint tax return for the year in which your property is sold, you can take a capital gains exclusion of $20,833 for each month you owned and occupied the home as your primary residence prior to the sale. In your case, with the numbers you gave, I suspect that your entire profit could be excluded from capital gains taxation.