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Questions Answered by James Daloisio
2 Answers | Asked in Tax Law for New Jersey on
Q: Selling my house will I be taxed based on the amount of the sale or the amount minus mortgage and capital improvements?
James Daloisio
James Daloisio answered on May 22, 2014

It depends. If you the house was your principal residence for two of the five years prior to the date you will sell it, then you can exclude up to $250,000 of gain ($500,000 if married filing jointly). If you have not used the house as your principal residence for two of the last five years, a... Read more »

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1 Answer | Asked in Tax Law for Pennsylvania on
Q: I have been living alone in my parents' home for the last 4 years. Will they have to pay capital gains tax if they sell

Parents are still living. They have a home equity loan on this house. Due to a short sale in 2012, we cannot buy another home until 2015, so we moved into their old home while they bought a smaller place. I've read that they have to have lived here for 2 of the last 5 years to avoid the capital... Read more »

James Daloisio
James Daloisio answered on May 18, 2014

Your analysis is correct: in order to exclude the tax on up to $500,000 of gain, your parents would have had to have lived in the house, as their primary residence, for two of the five years before the sale. Yes, the rule applies even though an immediate family member is now living in the house.... Read more »

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