Paper Topic:

Tax Research Project

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In the case of Rob and Nancy , where they are planning to buy a new house in Texas for 300 ,000 dollars and wants to sell their old house which has been a permanent residence of Rob for the last 19 months and had been living in New York for nine years before that . The cost of the old house was 120 ,000 dollars in 1998 and they believe they could sell it for 200 ,000 dollars this year , Rob had moved with his wife

19 moths ago and the house had been for the last ten years Nancy 's address

1 . The taxable gain by selling the old house today assuming that Rob s a joint return with his wife Nancy which results in a gain of 80 ,000 . They will only have one tax exemption for the sale of their home and do they have to be joint to qualify for exemption or one can qualify

When a person wants to sell his or her main home , there is a likelihood of gaining a profit out of the sale , there is also a probability that one can get losses . If a person sells and gets a profit , there are ways in which the profit which has been gained can be excluded from the taxable income of a person . There are various forms which exists in determining whether a person is liable for a tea exception or not

An individual can be exempted up to 250 ,000 U .S dollars profits on selling a residential house if a person is not married . For married couples , they are exempted up to 500 ,000 U .S dollars on the profits made on selling a residential house . However , these exemptions for both couples and a single person are effective as long as the house has been owned by the respective persons and they have lived in them for a minimum of two years of ownership . However , the two years which they have to live in the house need not be consecutive . Five years before selling of the house , a person should have lived in the house for at least two years or 24 months in the five year period , this means that the house should have been the principle residence for a person or persons . The rule of the two years out of the five years can be used by a person to exclude the profits which have been gained every time that a person is involved in exchange of the residential house or the sale of the house . in general , a person can only be able to claim the exclusion provided once in every two years and there are exemptions which are applied

If person or a married couple has lived in a house for less that two years or twenty four months , it is also possible for such persons to be excluded off a portion of the profits which may be gained out of a...

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