Q. Can you help me determine tax liability on the sale of our home? My husband and I have owned the home for 25 years and we are doing a cash sale to a contractor. We paid $112,000 and we have $74,000 and $10,000 loans on the house. We are selling it for $175,000. We are seniors and will rent in the future. What is our federal and state tax liability and what happens with the exit tax?
A. Good news.
Based on the information you provided it does not appear that you will have to pay any tax on the sale of your home.
Subtracting from the selling price what you paid for the house ($175,000 – $112,000) equals a $63,000 gain, said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton.
You can also subtract from the gain any expenses