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tax issues. my mom is going crazy!?

On October 24, 2009 / By Real Estate Law Help / In Washington-Real-Estate-Law

My mom sold a house last year with 3 months before 2 years of owning the house. the reason is because her real estate person told her that the law if you sell your house within two years, you have to pay taxes as your income(the profit you make). and when she went to talk to her tax consulatant, he told her that she had to pay all of her profit she received from the previous house which is around 30 thousand dollars! she is going crazy and wont talk to me! she has been sleeping ever since we got home from it. i live in washington! please help!!! what can she do?

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2 Responses to “tax issues. my mom is going crazy!?”

  1. Sandra_Dee said:

    Oct 24, 09 at 4:19 am

    hi,
    your mom won’t have to pay the $30K to the IRS. however, she does have to claim any profitable income. this also applies to the house she sold last year. i also suggest she gets her taxes professionally done under these circumstances. and it will be less stressful for your mom not to do them herself. and a pro will make sure she can use every deduction that she can. hope this helped! good luck! :)

  2. rlacy916 said:

    Oct 24, 09 at 3:44 pm

    The rule is that you are Exempt from paying taxes on gains of $250,000.00 (per spouse) if you owner occupied your primary residence for at least two years. If your mother sold before the 2 year exemption period I would suggest that her tax consultant look up the SAFE HARBOR rule, which allows for pro-rated relief for those selling for job relocation, health problems, and a few other reasons.

    This may be her last resort for relief. Remember, if she put money into the property that would count as a Capital Improvement and increase her tax basis and therefore lower the gains on the sale, and effectively lower her tax liability. So, she may need to add up whatever she put into the house…these were not write offs, but rater Capital Improvements.

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