Do I pay capital gains tax on a sold home that I leased and lived in for years but owned for only two months?

by Jennifer L. Romberger, CPA | May 07, 2018
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I leased a home for 10 years from a family member, and purchased it a month ago so I can sell it and move to a new home. I purchased it for the market value minus what I paid over the years, and sold it for $75,000 more than what I purchased it for on paper. Since I've lived there for more than two years but only owned it for two months, I have no idea what the capital gains situation would be.

Based on the facts presented, the $75,000 gain is a short-term capital gain that will be subject to your ordinary income rate for the respective tax year. I did look up exceptions to this, but unfortunately couldn’t find any specifically. There is still a chance that you may be able to get the gain excluded under the principal residence exclusion using your specific “facts and circumstances,” but more details would be needed, but frankly, I doubt it.

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Answered by: Jennifer L. Romberger, CPA, EA, is with Long Financial Group Inc. in Blue Bell, Pa.

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