As a retired Navy member with a 100 percent disability, if I sell my primary residence, which I’ve only owned for a year, will I owe any capital gains taxes?

May 01, 2019

If I only owned my primary residence for a year and I want to sell my house, will I owe any taxes due to capital gain? I will be profiting $6,000 if we sell for the list price, but there is a chance I could not be profiting anything. I am retired from the Navy, and I have a 100 percent disability. Also, the reason I'm moving is I now work from home and need an office. We want to do new construction that will take a year, so I can't put the money in a 1031 exchange.

Yes, there is a chance that any gain recognized will be subject to income tax. There are exceptions surrounding military service, change of employment, and disability, but due to the limited information provided, I don’t know if you would qualify. Using a year of use, if you recognize a gain of $6,000, your exclusion amount is $125,000 if you file single, $250,000 if married filing jointly. Based on my estimated calculation, the gain would be excluded. Lastly, I don’t know if you’ve excluded a gain in the past couple of years, but if you had, that would come into consideration too.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

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

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