Hi friends.

Had a question about taxes. I'll call the irs number tomorrow and ask them, and might even have to break down and pay an accoutant, but figured I'd ask the wise ones here as well about my tax dilemna: the sale of a house.

Here's the question. We were seperated all of last year and the divorce was final in September. The house sold in July. How and who puts that on their income taxes? We made a 12,000 profit that we split. And neither of us will be buying another house soon that I know of. I personally paid for 6,000 in repairs on the house in January, so I am sure I can use that.

I'm asking how i split that? Do we both put in on? I hope I am making this clear. We are filing seperately (obviously).

Btw, Xh is FUMING mad that he cannot claim the boys. He has not paid child support in 2007 (aka almost three months behind now) and yet he wants to claim them.

Thanks to anyone who can help ...oh, and hi to everyone else as well. I am still here everyday reading. I still find this place a calm in this storm even now.

my understanding from my lawyer is that each of you can claim an untaxable profit of a certain amount filing separately or double that amount filing jointly

it no longer matters if you buy something soon....that was the OLD tax law

i'll go check to see if i have the amounts

i had the info in my notes from my H&R block agent, not from my lawyer

the info i have says that you only pay "capital gains tax" for profits on your house exceeding $250,000 filing individually OR $500,000 filing jointly

So do I even put that I sold a house? Profit? In turbotax it asks you those questions. Do we both put that we sold a house?

I think I am confused here.

Thanks for helping Eav.

And who claims the taxes we paid on the house those 7 months?

i'm not sure about your other questions.....since i'll be selling sometime in the future, i got some advice but since i haven't sold yet, i don't know how to file after selling.

i hope someone can help you!

Hey IT....good to see you....

The sale of the home unless you sold one in the last two years is free of any capital gains taxes to the best of my knowledge. And, if I would have spent $6,000 to repair the home I would claim it, period. What should he be claiming???? I don't see anything here that he should be claiming.

If you want to do some research on your own, go to irs.gov and check out Publication 555 for information about what to do with your income in a community property state. Also Publication 504 for Divorced or Separated Individuals.

Those might help.

I'm a lil' bit rusty on this, but I think you need to ask a tax attorney this question.

That would be your BEST bet. Calling the IRS number might be helpful, but I used to work for IRS and sometimes the answers you get might be kinda "iffy".

H&R Block...well, I wouldn't ask them about anything complicated. Most of those folks just take a 6-8 week course to learn how to fill out taxes on a computerized program.

I think that a problem might arise in that you and your H never actually LIVED in the house, so IRS might not consider it to be the sale of your HOME, but a sale of investment property, which would be subject to capital gains tax.

In regard to the property taxes, whoever paid them is entitled to claim them on Schedule A.

Since you paid $6,000 in repairs on the property, you should report the sale in such a way that allows you to take full benefit of your contribution. BTW, you are not limited to just what you paid in 2006. Your cost basis should include ALL the money that you contributed to repairs/remodeling since you and your H purchased the house.

Like I said, you need to consult a tax attorney, but I think your calculation should look something like this:

Sales price of house less purchase price of house less any money jointly borrowed/spent to repair/remodel house = gross profit on sale of house.

Gross profit on sale of house divided by 2 = your half of gross profit (Notate that your H (include his SSN) received the other half).

Your half of gross profit less the money you PERSONALLY spent on repairs/remodeling house = your net profit to be reported on Schedule D.

Let your ex worry about deducting whatever he personally paid toward the repairs/remodeling.

Again, consult an ATTORNEY about this to see if you CAN claim this as selling your HOME.

As for your ex being mad about not being able to claim the kids...too bad...so sad!

Oh, and BTW, given your H's immaturity, be prepared to find out that he might beat you to filig taxes and try to claim the kids anyway. So...it would be wise to include a copy of your divorce decree that shows YOU as the custodial parent and giving YOU the right to claim the kids.

He canNOT claim the kids without your signed agreement, but he might try to claim them as living with him all year (which would be fraud, BTW).

It might not occur to him to try that trick, but it's best to be prepared.

Wow ! Thanks for the long reply.

So a tax attorney and not an accoutnant? Are they expensive?
This is all stressing me out now.
Ugh.
I don't have a lot of dinero for these kids of things.

My ex-h did live in the house on and off when he moved out. I never did, but hopefully that will count for him doing so.

Thanks, guys.
Anyone know what a tax attorney will cost me? I'm super budgeted now (like I am spending $25/week on groceries.

All this stinks, you know? Even now, I'm still having to pick up these pieces from this mess he made.

Sorry-- I'm getting down now.
Thanks again for the help.

I should have included a tax accountant, as well. Just tell whoever you talk to that you're using TurboTax and need the answers to the questions (write them down). Basically, all you really want to know is HOW to report the income. Tell the accountant that your H lived in the house off and on until it was sold. It may be that you can claim it as the sale of your home, since that is what it was intended to be.

Just answering a question shouldn't cost too much.

i used to be in public accounting.

if you lived in the house for at least 2 years, and didn't sell another primary residence in the past 2 years, there is no tax on any gain on the house when you sell it.

as far as property taxes and what not, that is b/w you and your W. both of you can not claim it.

if you use a CPA to do your taxes, it will probably run you $300, if i recall correctly, and depending on the complexity of your return.

and, you do need to put on your return that you sold a house. turbo tax should ask you the details to determine that your gain was not taxable.

hope that helps!

FO

InTexas

I will follow up on ForgivingOne.

I am a CPA.

If the house you sold WAS your personal residence, and you and or your XH lived in the home in 2 out of the five years prior to the sale, then the gain, if less that $250K to each taxpayer is excludible, and not even reported on the tax return.

If it was not your personal residence, totally different rules. And not geared to this forum.

Split the RE taxes/mortgage interest as agreed between you and XH.

As for who gets to claim the kids, First, in whose home did the kids live for more than half the year. What does the Divorce Decree state?

And there are your answers.

And next year file first. That's the one that always wins at the IRS....

LG

Hi LG. I have a question for you if you don't mind.

A little background might help. We bought the house in may 2005. Planned to do repairs in move in as soon as baby was born. In August 05, XH left suddenly for OW. He lived there on and off till Juy 06 when the house was sold. We ownned it only 14 months. It had every intention of being a primary residence, but his infidelity kind of got in the way. It's a huge sore spot for me--I spent all summer fixing it up and then $6000 of my own money (had to charge it) to get it sale-ready.

I get to claim the kids. He hardly pays CS and sees them very little. That is just his immaturity showing.

You said if we did not live there for two years then it's not geared for his forum--is that because it's gonna be a nightmare for me now --aka very complicated. We made a 12,000 profit--so 6000 a piece. We're not talking big bucks here.

Guess I'm off to find an accountant. This makes my head hurt. I'll even have to pay a babysitter so I can go to the accountant.

He hasn't filed--he's waiting to see what I find out is the correct way to file with the house.

I appreciate all the help. I guess I want to b prepared when I do find an accountant.
Thanks.

IT:

Why do you think you MADE $12,000?

Because that is what you walked away from the closing table with?

Or did you add up what you paid for the house, your closing costs, fix up expenses, and carrying costs (Interest/RE taxes/Insurance), and then the closing costs at the sale of the house?

Then subtract what you sold it for?

Because you could have walked away from the closing with $12K, but they were just refunding you for the $6k that you put in. So your gain would only be $6K in that case.

So do the math as above.

And depending on the rest of your income, you might not much taxable income anyway.

File your return. Claim the kids. Today.

Then send WH an email with the schedule D attached.

Even HR Block can do this one.

I let kids play on my office floor all the time.

Take to the office the settlement sheet at purchase, your costs to fix it up and carry it, and your settlement sheet when you sold it.

And a copy of your 2005 tax return.

Depending on circumstances, you could generate a significant refund.

Edited to add:



Your divorced. Tell him to hire his own accountant and figure it out, and tell you!


LG>>> the MB CPA