Capital gains, selling 2 months before 2 years.

[Wade Stahle]

Hi BP,

I am planning on selling my house before the 2 year mark. However, I am at about 22 months of ownership. Will I owe capital gains taxes? If so how much and how did you calculate this? Purchase price was $187,000 and I can sell for about $230,000. 

P.s. I know about the 1031 exchange but id rather not go through the stress of FSBO and trying to buy a house in a shirt period of time.

[Justin B.]

You said "my house" so I'm going to assume you live in it.  Don't confuse Capital Gains tax with the personal exemption.  If you've held an investment for a year + a day, capital gains tax comes into play (The rate varies depending on your situation).  There are exceptions to that (not worth typing out here), but that's the "general" rule.

If you have lived in the house for 2 of the last 5 years, you qualify for no tax on the gain.  Based on what you said it's worth, you're well within the limits.  Keep in mind, that's no tax on the GAIN, not the total sales price, so that's quite significant.  Selling 2 months short of that 2-year time frame would be very unwise.  Hold on for 2 more months.  The timeframe is all about the closing dates.  to be safe, just make sure to set your closing date a few days after the mark.  So if you bought 5/25/14, set your closing date for 5/28/16 or something like that so there is no confusion.