Taxes on sale of vacation home

[Dave N]

I searched and didn't see anything really similar, so here goes. We just sold our Alaska vacation place and got the Form 1099-S. Amateur googling for details on filing leads me to a form where I list the selling price. Another line shows what I believe to be for "cost" of said property. It's a long time until next year's taxes but are there limits to "costs" and improvements? Would I need an accountant to help me with this or can my online filing through Credit Karma have it available? I'm assuming commission fees and any of those related expenses that reduced our actual "net" are considered costs. Would furnishings and items like microwave, fridge, generator, kitchen items, and anything else that were included in the sale be considered costs?

Rough guessing for now we'll have an overall profit of around $6K or so if we can claim EVERYTHING we did or bought. Is there a different tax rate for that as opposed to wages?

I'm just having an "Oh, crap!" moment and slightly panicking about paying taxes next year. Glad we didn't make a fortune!

Thanks in advance for any answers.

 

[mdhunter]

I am not an accountant but would think you would owe capital gains on the profit less any related expenses. The tax burden (if any) won’t be onerous on that type of income.

 

[hank4elk]

Should have looked into 1031. You may still be eligible.

 

[Dave N]

Should have looked into 1031. You may still be eligible.

Looked that up. We used the proceeds to pay off our current home mortgage, car loan and a credit card.

I should also add, MOST of the interior items that went with the sale don't have receipts. Some were Cabela's, some Walmart, etc. and I only have a handwritten list of things for our own use just to kind of keep track of what we had spent. Lumber from Lowe's for the outhouse. Electrician to run a line and add a 200 amp service to the cabin. Well service to enable us to have a water supply going. Probably not going to be able to count much stuff as a "provable" expense.

 

[Dave N]

I should add I'm not looking for professional advice as such. Just an idea of what I'm getting into next year for taxes and can I handle it myself or not. Never had to deal with this before.

 

[Southern Elk]

You will only be taxed on the gain. If it’s only a $6k gain, it doesn’t sound like enough to worry too much about. I normally give my accountant a settlement statement for when I bought it and one for when I sell
it and she handles the rest. Don’t forget interest paid if you financed it and any improvements you might have made.

 

[BigHornRam]

Sent you a pm Dave.

 

[Dave N]

Don’t forget interest paid if you financed it and any improvements you might have made.

Paid cash by refinancing our current home. It's the improvement thing I wonder about. Just how deeply involved can I get? Claim the sleeping bags we left behind? We pretty much started with an empty cabin and supplied it to be livable. Plus adding utilities.

 

[Southern Elk]

Paid cash by refinancing our current home. It's the improvement thing I wonder about. Just how deeply involved can I get? Claim the sleeping bags we left behind? We pretty much started with an empty cabin and supplied it to be livable. Plus adding utilities.

Im not sure about items that you left behind that aren’t part of the house. Maybe someone here who’s a CPA will chime in. Adding utilities is definitely an improvement that you can claim.

 

[Dave N]

Did some more searching today on the company dime. Finally found a worksheet that told me what I needed to know. Using basic numbers without claiming any furnishings my total income still falls in the 0% tax rate on capital gains for married filing jointly. HA! Guess I was worried about nothing after all! Panic attack over. Thanks for the replies!

 

[BigHornRam]

Just make sure your state income tax liabilty is covered as well Dave. Every state has different laws.

 

[Dave N]

Looks like I'll mainly have to keep my income for this year a bit lower than last to play it safe. Shouldn't be hard to turn down some overtime now since the mortgage is paid off!

Illinois treats capital gains as income and taxes it as such. I hate this state!

 

[westbranch]

It sounds like you have it mostly figured out. But turning down additional income rarely makes sense when it comes to taxes, of course there are some exceptions with some tax "cliffs". But if your primary source of income is W2 wages and you are over income limits for EIC or some other credits you are almost never going to lose money with OT or additional capital gains.

Looks like I'll mainly have to keep my income for this year a bit lower than last to play it safe. Shouldn't be hard to turn down some overtime now since the mortgage is paid off!

Illinois treats capital gains as income and taxes it as such. I hate this state!

I'm just having an "Oh, crap!" moment and slightly panicking about paying taxes next year. Glad we didn't make a fortune!

My usual reaction when someone says they should have made less so they paid less taxes...

 

[Dave N]

Can't help myself on this one. Things are pretty well paid off around here for the first time EVER! I'm getting old enough that I'm tired of busting my ass making "extra" money to pay for things. I'm just ready to start slowing down and saving what's left of my body for things besides going to work. I get the point. Taxes would be way less than the remainder of more income. I'm just getting tired...

 

[westbranch]

For sure, that is a great reason not to work OT. I just try to corrects some tax misconceptions when possible. Don't let the tail wag the dog and all that.

 

[BigHornRam]

Looks like I'll mainly have to keep my income for this year a bit lower than last to play it safe. Shouldn't be hard to turn down some overtime now since the mortgage is paid off!

Illinois treats capital gains as income and taxes it as such. I hate this state!

I figured all you Illinois guys would be stump broke by now.....

 

[Dave N]

I figured all you Illinois guys would be stump broke by now.....

The natives are getting restless.