Capital Gain tax ?

[borreman]

What is the name of your state? California

I have owned a condo in Los Angeles for 1 year now. It has been an investment, until I recently changed all my utility bills to that address. It should be viewed as a primary residence soon.

I am selling the condo now and will make a profit of $40,000 on it. Will I have to pay capital gain tax on this profit ? If yes, how much ?

Thank you

 

[LdiJ]

What is the name of your state? California

I have owned a condo in Los Angeles for 1 year now. It has been an investment, until I recently changed all my utility bills to that address. It should be viewed as a primary residence soon.

I am selling the condo now and will make a profit of $40,000 on it. Will I have to pay capital gain tax on this profit ? If yes, how much ?

Thank you

You are being a bit vague. Do you actually live in the condo? It can't be your primary residence unless you actually live there....and then its only your primary residence during the period of time that you actually live there. Sending a bill there doesn't make it your primary residence.

In any case, the rule is that in order to exclude any gain it must have been your primary residence for 2 of the last 5 years. Since you have only owned it for 1, you don't meet the requirements to exclude any capital gain. There can be some exceptions that allow for a pro-rated gains exclusion (ie a sale due to a divorce and division of marital assets), but you have given no information that would indicate that an exception would apply.

How much capital gains tax will be involved depends on your overall income level and whether or not it would be a short term or long term gain. If you have truly owned it for at least one full year, then its a long term gain and most likely would be taxed at a 15% rate.

 

[tranquility]

I agree with LdiJ and add, if you depreciated the property in that year, you will need to pay tax on that amount as well.