AboutCarole Dunton Expertise Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions.
General knowledge of schedule C for small sole proprietorships.
No experience in corporate, estate, partnership or large business returns.
Experience 8 years as tax preparer for major national firm.
Expert: Carole Dunton Date: 7/13/2008 Subject: Sale of property
Question My Home burned on 1-31-08. The home insurance paid for the mortgage. I sold my property on 6-30-08. I have bought another home with the sales of the property. I will pay around $160,000 for the new home. My question is how much will I owe on taxes on the monies. I have already given $20,000.00 in tithes and offerings from the monies of the sale. I received $285,000 for the property. Thank you for your advice.
Answer Hi,
You will owe taxes on the gain (if any) on the sale of your home. First you need to calculate your cost basis. This is what you paid for the home plus capital improvements less the money you received from the insurance company. If you spent money on the damage caused by the fire, add that to your basis.
Once you have your basis you deduct it from your sales price to determine the gain or loss. If you have a loss it isn't deductible. If you have a gain it will be taxed as a short term capital gain. You deduct expenses of the sale - i.e. commissions and legal fees - from your sales price.
The money you gave to an organized charity would be an itemized deduction on Schedule A but doesn't pertain to calculation of your basis.
