How does means gain work when selling house?
I bought a cottage for 200,000 2 years ago if i sell for 300,000 do i singular pay means gains on 100,000?
Answers:
If the house is your primary residence, Up to $250,000 gain is charge exempt. If it is not a primary residence, you pay income gains import tax on the gain. The Gain is computed by taking your original cost, the "Basis" and tallying the cost of any improvemnts to the house to become the "adjusted basis". Improvemnts approaching new doors, window, roof, etc. apply. Regular maintenence, like courtyard work, cleaning etc do not..You then subtract the Adjusted spring from the sale price.
In your bag, if the house cannot be called your primary residence ( you LIved within more than 6 Months per year) and you had no improvements. the gain would be 300k - 200k or 100k.
If it is your primary residence, you take a cool 100k tax free.. Excellent!
Note that if you are married and file jointly the wealth gain exclusion on the sale of a primary residence doubles to 500k.
Hope this help
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