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Daycare and Taxes>Questions Regarding Selling Of Home...
daycaremommy 05:13 PM 01-17-2011
In April we sold our house, we only made a profit of about $1,200
We lived there for little over 5 years.
I have been doing my own daycare taxes in form mode with turbotax.
What do i need to do regarding the sale of the house
We also lived with my mom for 4 months before purchasing our new home. We did pay "rent" that included utilites, phone, internet,etc. but our rent money was going towards money that we owed my mom.
Just wanted to know what i need to do?
Thanks so much!
We lived there for little over 5 years.
I have been doing my own daycare taxes in form mode with turbotax.
What do i need to do regarding the sale of the house
We also lived with my mom for 4 months before purchasing our new home. We did pay "rent" that included utilites, phone, internet,etc. but our rent money was going towards money that we owed my mom.
Just wanted to know what i need to do?
Thanks so much!
Michael 06:57 PM 01-17-2011
Welcome to the forum daycaremommy!
TomCopeland 07:23 AM 01-18-2011
There are two potential taxes when selling your home: tax on the profit on the sale of the home and tax on the depreciation you were entitled to claim while using it for your business.
You'll only owe tax on the profit on the sale of the home if you lived in it and owned it for 2 out of the last 5 years before the sale, and the profit was more than $500,000 (married) or $250,000 (single). Since your profit was below these numbers you don't owe any tax on the profit.
You will owe tax on depreciation you claimed, or were entitled to claim while using the home for your business. If you made a profit during the years you were doing child care in the home you were entitled to claim house depreciation and thus you owe tax on it. Look back at Form 8829 for the last 5 years and see how much depreciation you claimed. You must report this on Form 4797 and Schedule D.
If you didn't claim this depreciation in the last five years, file Form 3115 which will allow you to now claim this depreciation on your 2010 tax return. You will still owe the tax on it.
A chapter in my 2010 Family Child Care Tax Workbook has a chapter on sale of home and how to fill out these forms.
You'll only owe tax on the profit on the sale of the home if you lived in it and owned it for 2 out of the last 5 years before the sale, and the profit was more than $500,000 (married) or $250,000 (single). Since your profit was below these numbers you don't owe any tax on the profit.
You will owe tax on depreciation you claimed, or were entitled to claim while using the home for your business. If you made a profit during the years you were doing child care in the home you were entitled to claim house depreciation and thus you owe tax on it. Look back at Form 8829 for the last 5 years and see how much depreciation you claimed. You must report this on Form 4797 and Schedule D.
If you didn't claim this depreciation in the last five years, file Form 3115 which will allow you to now claim this depreciation on your 2010 tax return. You will still owe the tax on it.
A chapter in my 2010 Family Child Care Tax Workbook has a chapter on sale of home and how to fill out these forms.