I was given a house which I put on the market and sold within three months. Will I be taxed on the difference between what the buyer paid plus improvements and the sale price?
Pretty much, @geevastola. (And welcome to the community, by the way!) When you get property as a gift, you also get the giver’s tax basis–what the giver paid for the property plus the cost of improvements (which typically doesn’t include maintenance or repairs, unless those are required to sell it). You can subtract other selling costs from the sale price, including the real estate agent’s commission, legal fees, etc. You pay capital gains taxes on the resulting profit.
All this assumes you didn’t live in the house for at least two of the previous five years. If you did, then you can exempt up to $250,000 of home sale profits from your income (or $500,000 if you’re married).
The rules are different when you inherit a property for someone who dies–then the tax basis is usually raised to the current market value as of the date of death.
Which is more than you probably needed/wanted to know! Would love to know what you’re planning to do with the money you cleared…