Question:
This was our first house and lived in it for 5 staight years. We bought a second house and rented our first house to some family members. They lived their for 2 years and payed us rent. We claimed it on our taxes as rental and are now wanting to know if we will have to pay capital gains taxes next year on the money we made on the sale of the house? If so what is the percentage?

Answer:
You have to pay taxes on gains over 250K for an individual or 500K in your case. In calculation of the gains you can also deduct all the improvements you made.

You do not have to pay any taxes if you lived in the house for over two out of five years prior to it's sale and your gains are less then stated above. So, sell now, and good luck.

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