Marietta, GA asked in Tax Law for Georgia

Q: I was quit claimed a house in 2017. I’m selling it this year 2024. What is the tax implications. 2017 to 2024 difference

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James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: Based on the information provided, here are the key tax implications for selling a house in 2024 that you acquired via a quitclaim deed in 2017:

- You likely have a capital gain on the sale, since you are selling the house for more than your tax "cost basis" in 2017. Your cost basis is generally the fair market value of the house when you received the quitclaim deed.

- Any capital gain (sale price less adjusted cost basis) will be taxed. The long-term capital gains tax rates apply if you owned the home for over 12 months. The rates are 0%, 15% or 20% depending on your taxable income and filing status.

- You can exclude up to $250,000 of capital gains as a single filer or $500,000 if married filing jointly, if you meet the ownership and use tests to qualify for the capital gains home sale exclusion.

- Depreciation recapture tax may apply if you took any depreciation deductions against the house previously. This includes if it was ever used as a rental property. Any depreciation is taxed at a maximum 25% rate when sold.

- You will owe capital gains taxes on any amount of capital gains that exceeds your capital gains exclusion if applicable. State capital gains taxes may also apply.

- Be sure to account for any eligible home improvements or sales expenses in your cost basis when calculating your overall capital gain or loss.

Speaking with a tax professional is recommended to review your specific tax situation.

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