How to avoid capital gains tax on house sale

[Anonymous]

You could sell your house for less to avoid taxes.

[Anonymous]

Do some home improvement to increase the basis.

[Anonymous]

Your water heater is not a capital improvement

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pay the tax. If market tanks, you can pick up great stocks 50-60% off. Once it turns around, you will double your money. Bull markets last under a year.
I argued with several family members about selling two properties. They wanted top dollar while I wanted the money out. Meanwhile, my stocks and crypto did 8x and 4x in 2023-2024.
They ended up selling for what I had told them the home was worth a year later. Still waiting for the cash. Good that market crashing again.

If you want to speculate on the market, you can get a loan.

It's great for you thay you made money speculating, but every dollar you made came from someone who tried the same thing but lost.

What a dumb response.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Pay the tax. If market tanks, you can pick up great stocks 50-60% off. Once it turns around, you will double your money. Bull markets last under a year.
I argued with several family members about selling two properties. They wanted top dollar while I wanted the money out. Meanwhile, my stocks and crypto did 8x and 4x in 2023-2024.
They ended up selling for what I had told them the home was worth a year later. Still waiting for the cash. Good that market crashing again.

If you want to speculate on the market, you can get a loan.

It's great for you thay you made money speculating, but every dollar you made came from someone who tried the same thing but lost.

What a dumb response.

Not really. It’s safer to have an asset like real property in this unpredictable market. Stocks are wildly overpriced and seemingly unhitched from fundamentals. It’s basically gambling and seeing which CEO plays the political game best. Could you machine having your life savings dependent on the personality whims of Musk or Zuck? No thank you. A house can be rented to earn income. I can always move back in if so need to etc.

[Anonymous]

Add up ALL your capital improvements! HWH and floors are absolutely capital improvements and increase your basis. The key is getting your basis up.

[Anonymous]

Isnt long term capital gains rate only 20 percent? You get the $250k exclusion if you have lived there, so you would only pay $30k tax on $400 k of profit.

I would pay the tax and stop being greedy.

[Anonymous]

Could you agree to sell for a lower price but have the buyer handle paying agent fees, transfer taxes, etc (all the stuff the seller normally handles)?

[Anonymous]

Anonymous wrote:Your water heater is not a capital improvement

A new water heater absolutely increases your basis.

Scroll down for a list of the items that you can add to your basis.
https://www.irs.gov/publications/p523#en_US_2019_publink100010755

[Anonymous]

It's all self reported anyway and no one at the IRS was looking even pre-DOGE. I doubt anyone is paying cap gains on a home sale.

[Anonymous]

Anonymous wrote:It's all self reported anyway and no one at the IRS was looking even pre-DOGE. I doubt anyone is paying cap gains on a home sale.

No it isn’t self-reported. There is an information form sent to the IRS that you sign at closing when you sell.

I once sold a house and forgot to include the form on my tax return. I got a letter from the IRS two years letter with an assessment that used zero as my basis on the house I sold (because I had not included the form in my tax returns. The has to go to the courthouse and get a copy of the deed from when I bought it to prove the basis in my reply. I didn’t owe any tax because we were under the exclusion amount in gains. But it was a hassle.

[Anonymous]

Question. I had to refinance and bought my ex out of the house. If I sell, is the capital gains related to the assessed value when I started owning the house or when I first bought the house with him?

[Anonymous]

Anonymous wrote:Could you agree to sell for a lower price but have the buyer handle paying agent fees, transfer taxes, etc (all the stuff the seller normally handles)?

Interesting strategy, but I believe that stuff would come off the gain anyway, so it wouldn't have any impact. The gain is calculated as sale price minus basis, which includes purchase price, improvements, and transaction costs (commissions, taxes, etc.).

[Anonymous]

Anonymous wrote:Question. I had to refinance and bought my ex out of the house. If I sell, is the capital gains related to the assessed value when I started owning the house or when I first bought the house with him?

If only there were professionals who could answer these questions...

[Anonymous]

Do don't roll it into another house. Say you have $400k of gains (you reduce the gain with closing costs, improvements, realtor fees, etc.) then $250k of it will be tax free. Can you really not pay 20% of $150k gain for $30k? Seems reasonable to me on a profit of $400k.