Wisconsin Foreclosed Homes
April 25th, 2007
Wisconsin Foreclosed Homes
Question: Selling home in 1 year, how do you calculate tax penalty?
I have purchased a foreclosed home for $80,000. I would like to sale it for 110,000. Would I have any tax penalty if I sell it in 1 year? I live in the state of Wisconsin.
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Answer: It depends if you keep it more or less than a full year. If less than a year, you would be taxed as though that $30,000 gain (less selling expenses) was added on top of your other income.
If you keep it more than a year, the gain would be taxed at the lower capital gains rate. Check WI Dept of Revenue website for specifics about state income tax for capital gains. I did look into that when considering selling WI property that I own, but am foggy on details (have not lived in WI since 1975).
You would actually have to live in it for 2 years for up to $250,000 ($500,000 if married filing jointly) of gain to be excluded from federal income tax.
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