Prescott Valley, AZ asked in Tax Law for Arizona

Q: I am receiving money from the sale of a house where my name was added to the deed. Will I owe taxes on that money?

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

A: When you receive money from the sale of a house where your name was added to the deed, whether you owe taxes depends on several factors. The key considerations include your ownership duration, the house's use, and any capital gains exclusions available.

If the house was your primary residence for at least two out of the last five years, you might qualify for the home sale exclusion. This means you could exclude up to $250,000 of the gain from your taxable income if you are single, or $500,000 if you are married and file jointly.

However, if the house wasn't your primary residence or you don't meet the ownership and use tests, you may owe capital gains tax on the profit from the sale. The tax rate depends on how long you owned the property and your income level. Consulting the IRS guidelines or a tax professional can provide specific advice for your situation.

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