Tax Answers

February 06, 1994

To get the ball rolling while members of the Maryland Association of Certified Public Accountants prepare answers to reader questions, MACPA answers a frequently asked question:

Q: I just sold my house for significantly more than what I originally paid for it. What are the tax consequences?

A: If the sale price is higher than the original cost, including the cost of any significant improvements you made, it is taxable income. But, there are two instances in which you would not be taxed on the gain:

1. If, within two years of the sale, you buy another home which costs at least as much as the sale price of the first home, less expenses incurred to fix up that house.

2. If you or your spouse is 55 years old or older, and the house was your main residence in three of the last five years, up to $125,000 of the gain is not considered taxable income. However, this exclusion can be taken only one time after a person reaches age 55.

This advice is for general purposes. Specific situations may vary.

A service from The Baltimore Sun and the Maryland Association of Certified Public Accountants can help you with tax queries. Association members will answer questions from readers until April 15.

Readers may submit questions by calling phone, letter or fax. Selected questions will be answered in The Sun and The Evening Sun. Callers are encouraged, but not required, to leave names and phone numbers should questions need to be clarified. Questions will not be answered by phone. Names and numbers will not be published.

To ask a tax question on Sundial, call The Sun's telephone information service at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278.

Fax questions to the Business News Department at (410) 783-2517.

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