Most people need not worry about income taxes on home sale
Spouses who split up have options when it comes to declaring the profits from the sale of a home.
Q. My husband and I filed for divorce about a year ago. We sold our longtime home and split the profits about 60 days ago, but the divorce itself wasn't finalized until Feb. 2 of this year. How will this affect our tax-filing status when we begin our 2014 income-tax return? Also, how will this affect the $42,000 we each got from the home's resale proceeds?
A. Your marital status on Dec. 31 of any given year determines the choices you have when selecting your tax-filing status. Though you were officially divorced just a few weeks ago, you were still legally married at the end of 2014. That means you and your ex-spouse can choose the "married filing jointly" status or "married filing separately."
Quirks in the income-tax law tend to make joint filing more attractive by boosting a couple's refund or by lowering the amount of any taxes that may be owed. Talk to an accountant or other tax expert for details.
Regardless of which filing status you select, the money you received from the resale profit of your home won't have any effect on your federal income-tax return. If you choose the joint-filing route, the two of you would qualify to keep a combined $500,000 in profit tax-free if the home has been your primary residence for at least two of the past five years. Should the two of you instead file separately, you'd each get to keep up to $250,000 in profit away from the clutches of the Internal Revenue Service.
Your letter states you each made $42,000 from the sale, for a combined total of $84,000, so no taxes would be owed on the profit whether you file jointly or separately. Get a free copy of Internal Revenue Service Publication 523, Selling Your Home, by calling the agency at (800) 829-3676 or by downloading it from www.irs.gov.
Q. Is it true that George Washington was once one of the largest landowners in the United States?
A. Yes. He owned thousands of acres, spread across several states - from the verdant Ohio Valley, east to New York and south to Washington, D.C. But the crown jewel of his holdings was his 7,000-acre Mount Vernon estate in Virginia, which is now open to the public mostly due to the hard work and fundraising efforts by the nonprofit Mount Vernon Ladies' Association.
To his credit, President Washington, who was born Feb. 22, 1732, wrote in his will that all of his 123 slaves who labored at Mount Vernon were to be freed upon his death, which occurred in 1799. At the time, his nationwide real estate portfolio topped a staggering 52,000 acres.
Over the centuries, Feb. 22 has been an important date in U.S. real estate history. That's the date that, in 1819, Spain renounced its claim to what was then called "Oregon Country," a disputed region in present-day Florida, Alabama and Mississippi, and closed the deal exactly two years later for a payment by Uncle Sam of $5 million.
On Feb. 22, 1825, Russia and Britain established what is now the border between Alaska and Canada. Exactly 64 years later, the Dakotas, Montana and Washington state were admitted to the union. Hawaii became an official U.S. territory on this day in 1900.
Q. You recently wrote about Rikers Island, the prison facility in New York City. Is that the same place police on all those cop shows call "The Tombs?"
A. No. "The Tombs" is the nickname for the southern building in the Manhattan Detention Complex, two high-rise jails in Lower Manhattan that are just steps away from several courtrooms and related judicial agencies.
The Tombs hold about 900 prisoners daily, all of them males who are awaiting arraignment within a day or two. The nickname stems from the original jail's Egyptian-style architecture, which reminded many New Yorkers of a pharaoh's final resting place.
The original facility was built in 1838 and has since been replaced by a modern complex, but its moniker has stuck with generations of residents in the Big Apple.
Real estate trivia: One study suggests that George Washington's real estate holdings, after adjusting for inflation over the years, would make him the fourth-wealthiest American today, behind only Microsoft's Bill Gates, investment guru Warren Buffett and Internet entrepreneur Larry Ellison of Oracle Corp.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2015, Cowles Syndicate Inc.