28 Sep We’re selling our N.J. home. Is it a short- or long-term gain?

Q. We bought a house in New Jersey in 2009 and we still own it. My wife and I moved to another state in 2013, and after that, my son lived there. Now we will sell the house. Is it considered a short-term capital gain or long-term capital gain?
— Sellers, soon

A. It sounds like you’ve owned the home too long for a short-term gain to come into the picture.

Here’s what you should know.

You owned the home sometime before 2013, and your son lived there for the past 10 years, so this would be a long-term capital gain, said Neil Becourtney, a certified public accountant and tax director with Smolin, Lupin & Co. in Red Bank.

That’s because you held the asset for more than one year, he said.

For federal purposes, a long-term capital gain is taxed at lower rates than other income, with the maximum tax rate being 20%, Becourtney said.

It’s also important to know that because you have not used this house as your principal residence for a period of at least two out of the preceding five years, you are ineligible to exclude up to $500,000 of the gain realized, Becourtney said.

“The gain you realize on this sale will be combined with any other capital gains and capital losses that you generated in the year of sale,” he said. “Be sure to capture all capital improvements made and to take into account the various closing costs incurred on the sale such as realtor commissions in calculating your gain.”

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This story was originally published on Sept. 28, 2023.

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