How handle home sale proceeds?

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ActionTransaction
Posts: 7
Joined: Thu May 18, 2017 7:22 am

How handle home sale proceeds?

Postby ActionTransaction » Thu May 18, 2017 10:01 pm

Hey folks!

Long time lurker, first time posting. This is such an informative and welcoming space, thanks for all the contributions!

I have a somewhat basic question.

I have sold my home (primary residence), in Texas.
I will be renting until I find another home.
I am fortunate in that I will be profiting from the sale less all commissions and payoff.
I am netting less than 250k in profits, and as I understand it, I will owe nothing in taxes (capital gains?) because it is less than 250k.
With the proceeds: I plan on using some for a nice down payment, build up personal and home emergency funds, invest some, and make some personal purchases.

I want to make sure i don't get into any tax issues, does anyone see a problem with the above? I know in the past there was a fuse on property gains that you had a time limit to put back into another home or there would be a penalty. Best I can tell this is no longer the case.

If anyone could point me to a resource on this I would appreciate it.

Also, I am having the proceeds wired into a checking account. From there, I would like to move the money around to different institutions. I will be over the 10K IRS reportable amount. Will this be an issue other than it gets reported and noted? I don't want to raise any red flags.

Thanks folks!

LifeIsGood
Posts: 580
Joined: Mon Feb 11, 2008 8:43 pm
Location: Atlanta, GA

Re: How handle home sale proceeds?

Postby LifeIsGood » Fri May 19, 2017 7:18 am

Congratulations on your sale. As long as your profit is less than $250K and you're single, there are no tax issues. A long time ago there was a time limit to reinvest the capital gains but that is no longer. Look for an online bank that offers a bonus for transferring your money in. Right now Cit Bank offers a $250 bonus for a $250K transfer and they pay 1.15% interest - https://www.bankoncit.com/savenow-direct/

tomd37
Posts: 2556
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: How handle home sale proceeds?

Postby tomd37 » Fri May 19, 2017 7:25 am

Although you did not clearly state, I assume your federal filing status is single. Therefore, if your net profit is less than $250,000 you will not owe any federal tax on the profit. If you end up receiving a Form 1099-S reporting the sale of the home you WILL have to report the sale on Form 1040, Schedule D and Form 8949. Still no tax though.
Tom D.

stan1
Posts: 4669
Joined: Mon Oct 08, 2007 4:35 pm

Re: How handle home sale proceeds?

Postby stan1 » Fri May 19, 2017 7:31 am

Be very, very careful about wiring instructions. There is an increasing level of fraud related to wire transfers. If the sale proceeds are wired into the wrong account and withdrawn your money is GONE. Wire transfer fraud has been going on with businesses for some time. I know one very savvy business owner who is an engineer and CISSP certified who was a victim. His company received a fraudulent invoice that appeared to be from a regular supplier showing a balance due and paid it without verifying the legitimacy. He would not tell me how much money he lost. He thinks an insider was involved because the invoice looked legitimate and the amount due was in the ballpark of what was expected. Law enforcement told him it is common. Now wire fraud is beginning to spread to mortgage closings. Wire transfers are not insured against loss.

Your escrow company (or similar) should be extremely cautious about wire transfers and should take extra steps to verify with the receiving financial institution that money is being wired into your account. If you aren't in a hurry to get the funds you may want to investigate other methods to get the funds.

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BolderBoy
Posts: 3017
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: How handle home sale proceeds?

Postby BolderBoy » Fri May 19, 2017 10:24 am

ActionTransaction wrote:Also, I am having the proceeds wired into a checking account. From there, I would like to move the money around to different institutions. I will be over the 10K IRS reportable amount. Will this be an issue other than it gets reported and noted? I don't want to raise any red flags.

The $10k issue (now lowered to $5k I think) relates to cash transactions, so you needn't worry there.

Also, it is unlikely that your proceeds are going to be WIRED into your checking account, unless you specifically asked for a wire transfer. They will be ACHed which is a very safe modality. Just be sure the routing and account numbers are correct.
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

adamthesmythe
Posts: 1451
Joined: Mon Sep 22, 2014 4:47 pm

Re: How handle home sale proceeds?

Postby adamthesmythe » Fri May 19, 2017 11:18 am

LifeIsGood wrote:Congratulations on your sale. As long as your profit is less than $250K and you're single, there are no tax issues. A long time ago there was a time limit to reinvest the capital gains but that is no longer. Look for an online bank that offers a bonus for transferring your money in. Right now Cit Bank offers a $250 bonus for a $250K transfer and they pay 1.15% interest - https://www.bankoncit.com/savenow-direct/


There is also the requirement about length of time used as a principal residence. Provided you also meet those requirements (look it up) you will owe no capital gains taxes.

In a similar circumstance I used a wire transfer, partly because it was free, with no problems.

> I don't want to raise any red flags.

Doesn't matter does it? It's legitimately your money.

ActionTransaction
Posts: 7
Joined: Thu May 18, 2017 7:22 am

Re: How handle home sale proceeds?

Postby ActionTransaction » Tue May 23, 2017 6:52 am

Much appreciated everyone! :sharebeer

I feel a lot more comfortable with the situation.

Swansea
Posts: 379
Joined: Sat Feb 13, 2016 5:16 am

Re: How handle home sale proceeds?

Postby Swansea » Tue May 23, 2017 7:08 am

I don't see an issue, unless you had deferred a capital gain from the sale of a previous residence and rolled over the profit to buy the Texas house. In that case, the capital gain from the previous house would affect your cost basis. As always, keep track on any improvements, costs of selling, etc. in case needed for any changes than may occur in the tax code.


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