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I purchased a second home for 85K and invested about 50K to rehab it 3 years ago. It appraised for 165K but I have an offer for 157,500 with 7,500 towards their closing costs. What are my tax implications? I am married, filing jointly, sold primary home on 4/2015. Moved and no longer live in the US since 1/2015 and have residency here but am still a US citizen. I am 61 and spouse is 55.

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  • where is here? Moved and no longer live in the US since 1/2015 and have residency here but am still a US citizen. Apr 12, 2015 at 10:42

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Looks like you will owe Long Term Capital gains on the $15,000 gain. 2015 Long Term Capital gain rates are based on your tax bracket.

$157,750 - $135,000 - $7,500 = $15,000

You might owe tax on primary home if you gain was more than $250,000.

Hope that helps.

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    The OP said its a second home, so primary residency exemption won't apply.
    – littleadv
    Apr 11, 2015 at 19:41
  • Would it be of benefit to me to pay myself that as income since the reason I did this renovation was as a job? I live out of country so isn't the first $106k tax free?
    – Linda
    Apr 11, 2015 at 21:15
  • The 15,000 may also be reduced by the sellers closing costs: I assume there is a real estate agent involved because the seller isn't even in the country. 6% of %157,500 is $9450. Apr 12, 2015 at 10:45
  • Yes, I was just relying the fact about the primary residency as other information, in the off chance it applied.
    – Firejava
    Apr 12, 2015 at 15:36
  • The long term capital gain rate for 2015 is 0% if your under $74,900 AGI (for Married couples). Therefore you will still need to file tax return, but most likely will not owe anything.
    – Firejava
    Apr 12, 2015 at 15:42

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