Denita is correct. Also remember that closing costs and commission for your real estate agent will reduce your profits somewhat.

Yes Denita gave you pertinent information. Your loan isn't important, what matters is what you bought for, what you're selling for, and your costs (selling and capital improvements).

A good realtor can do an estimate sheet for you, what you would net after selling, paying off your loan, and expenses. The CPA can answer the tax questions.

Great info above. I would like to add one thing. You may want to consider an Enrolled Agent (EA) for your tax questions. EAs are the only tax professional whose “license” comes from the IRS. EAs have passed three tests and an IRS background check. They have to take a minimum of 16 hours of continuing education in taxes annually (and 72 hours during every three year enrollment cycle).

jlhug is right.

An EA could represent you if you are being audited. We love our EA, the benefit we have received from him is way more than what we have paid him.

Why use an Enrolled Agent?

Not all paid return tax practitioners are equal! This IRS chart outlines the different levels of testing, continuing education requirements, unlimited representation rights and other criteria that you should know before hiring a tax professional.

Using an enrolled agent can save significant time and effort in tax preparation and its associated tasks. EAs are equipped to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. EAs’ Continuing Education (CE) requirements ensure they have the knowledge to effectively represent taxpayers audited by the IRS despite the continually changing tax laws. In fact, EA members must fulfill continuing professional education requirements that exceed the IRS’ required minimum.

NAEA EAs provide two unique benefits to taxpayers.

Emphasis on Ethics – Our principal focus is honest, intelligent and ethical representation of taxpayers before the governmental agencies. Our members adhere to a stringent Code of Ethics and Rules of Professional Conduct of the Association, as well as the Treasury Department’s Circular 230 regulations. In addition, our members belong to a strong network of experienced, well-trained tax professionals who work to make the tax code fair and reasonably enforced.

Proof of Expertise – Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are given unlimited representation rights before IRS. Unlike attorneys and CPAs, who are state licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.

Review our directory of state affiliates and chapters to find additional resources near you, or Find An Enrolled Agent today!

Please contact our office at 202.822.NAEA (6232) or toll free 855.880.6232 or info@naea.org for additional information.

Source

You are trying to figure it backwards.

I'm just going to pull some figures out of the air: Say you sell the house for $500,000. Your realtor charges you 6% for handling the sale. Subtract $30,000 for the realtor from $500,000, leaving $470,000.

You owe the bank $300,000 on your mortgage - they are going to be at the closing with their hand out. Subtract the bank's $300,000 from the $470,000. That leaves you with $170,000. That's yours - your equity. You can use it to buy a new house, or put it in the bank, or bet it all on a red 7 at the roulette table.

You said above that you have $200,000 equity in the house. You might, and you might not. It all depends on what you sell the house for. That $200,000 is an estimate, not a guaranteed figure. If you sold the house for $600,000 instead of $500,000, your equity would be much bigger. If you sold it for less than you owe in mortgage, you would have NO equity.

Equity simply means the portion of the house that is yours free-and-clear.

So, in my opinion, the whole EA versus CPA thing is kind of silly. If you are just looking for typical tax preparation, just find the professional you connect with, who adequately explains things to you, and who charges an amount reasonable for the services provided.

You are asking easy questions and, an array of professionals can help you.

------

There are certain benefits to choosing either. Enrolled Agents tend to be cheaper and for tax services an excellent choice for most people. CPA's tend tend to be more expensive and excel when the questions move beyond tax. Tax attorneys are the most expensive, and you will know when you need a tax attorney.

Bry, most people in the US don’t have a clue what an EA is or that they even exist. My goal was to let people know that there is another group of tax professionals with a designation who can help people with their taxes.

jlhug - I wasn't really addressing you in particular. It seems there is a general turf war between CPA's and EA's that I find rather ridiculous.

To be fair, I know you and I both have some skin in that game, so I am not going to start defining when one is right vs. the other. Largely, I think most people could use the advice of a good CPA, but probably wouldn't listen to the advice anyway, so why pay the extra money?

littlebug, I'm not sure about the OP's use of the term "equity" as they are bringing their mortgage into the discussion. One can have a high mortgage, get little cash after a sale but have a huge gain for taxes because they refi'd during their ownership. The mortgage or equity may not be relevant when discussing income tax.

I have $200,000 equity in my San Diego home on a 30 years FHA loan.

What do you mean by $200,000 equity? Do you mean you have paid off $200,000 of your mortgage? (Example: $300,000 mortgage and you currently owe $100,000?) If so, then you will pay the bank only the remaining balance at time of sale ($100,000 in the example).

The calculation is exactly what littlebug says above. You cannot calculate how much money you will receive until you know exactly how much buyers will be paying you for the home. Then you must deduct expenses and remaining mortgage balance. The bank takes whatever the remaining balance is on your mortgage. (Even if the sale price of your home is less than your original mortgage.) You will also pay property taxes, utilities, insurance, HOA, etc for the period of time during which you occupied the home for the year. If you or your buyer uses a realtor you will probably pay 6% of the sales price to the realtors. If you have any outstanding loans using your house as collateral, you will also pay those off (home equity loans, etc). You will need to consult with a CPA, but I believe federal taxes are not collected on the sale of a home if you have lived in the home within the last 2 of 5 years as your primary residence. (Disclaimer: I am not a CPA.)

PS, don't get confused by the in-house sniping about CPA or EA. Just know that you can get real-life numbers from a realtor (most are happy to do it without any obligation, even if you decide to not list at this time) and get advice from a tax professional about how much of that you get to keep.

Good luck.

PS, don't get confused by the in-house sniping about CPA or EA.

Just to be clear, I don't see any in-house sniping. I don't do taxes and don't really care who the OP or anyone else picks for their taxes. However, sometimes people get so wrapped up in picking the best certification for their job, that they forget to pick the best person for them. The same thing goes for recommendations.

There are a myriad of people who can give the OP the tax advice that they need as well as some input on what to do with the money while they wait on the next purchase or even if they should be waiting, selling, etc.