I have a financial question. I have heard that the current regulations regarding taxes and house selling is: no capital gains taxes are paid from the first $250k earned from the sale of a house.
I have heard this before, but it just sunk in for me last week.
My question is: does this apply to me too? (In essence it boils down to that.)
Regarding my Impulsive Purchase that BB and I bought last year:
We bought it for $160k and put $120k into it. So one way or another we have paid $280k for the house. If we sell it for $400k…we are almost at the $250k appreciation level from the sales price even though half of the appreciation is from money we put in?
I guess my question is- is the $250k appreciation a “free and clear” appreciation (accrued from property value up to $530k), or will I just get the benefit of not paying capital gains on money I put in and invested in the property?
I am guessing the $120k I put in counts towards the first $250k appreciation break.
Was there a loophole that I could have utilized to ensure that my $120k counted towards the cost of the house and not towards an upward appreciation?
We are not planning to sell! I just want to know how it all works, now that I have a grasp on the concept.
Capital Gains Question