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Showing posts from June, 2016

134 West 88th St., PH4A: Gorgeous Penthouse Duplex with Two Private Rooftop Terraces

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Legal Line Question of the Week: The Capital Gains Tax Exemption

The Capital Gains Tax Exemption 

Question: I have been speaking to a seller about representing her in the sale of a residential property. The seller has owned the property and used it as her primary residence for one year and nine months. The seller has indicated that she cannot sell until she has owned the property for at least two years. What is the importance of the two year time frame?

Answer: The two year time frame that the seller is referring to relates to the way that the &quotgains&quot on the sale of the property is taxed for income tax purposes. In general, income is taxed differently depending on how it was earned. Income is generally taxed either as a long term capital gain or as ordinary income. Long term capital gains are taxed at a preferential rate as compared to ordinary income. The profit from the sale or exchange of a property is a capital gain. On the other hand, ordinary income includes salary, wages, commissions, etc. Thus, after selling a home the amount …