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by rmm3030 on December 6th, 2006

rmm3030

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I lived in my home for 5 years and sold it. I used a portion of the profits to buy another home. Do I have to pay capital gains on the money I did not use to by the new house?

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Answers. 2 helpful answers below.

  • by Old School on December 6th, 2006

    Old School

    From IRS Publication 523

    http://www.irs.gov/publications/p523

    In general, you can exclude $250k of your home sale capital gains from taxation ($500k for a married couple filing jointly).

    You can take advantage of this provision provided you live in a home for at least 2 years of a 5 year ownership period (see the IRS publication for more details)

    If your capital gain has exceed the maximum exclusion of $250k, then you owe capital gains tax on the excess amount.

    There is no longer a "rollover" provision for home sale capital gains wherein buying another home shields the capital gains from taxation, unless you do a 1031 exchange of property

    http://en.wikipedia.org/wiki/1031_exchange

    As always, consulting with a professional tax adviser about your particular situation is a good idea.

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  • by rmm3030 on January 9th, 2007

    rmm3030

    Yes, I did some research and found the following (which I called and confirmed witht IRS):

    http://www.bankrate.com/bosre/itax/news/taxguide/home-gain1.asp?caret=18

    Up to $250,000 ($500,000 married) is tax free assuming you stay in the home as a primary residence for 2yrs and a day. You can do this over and over again. As you mentioned, anything over and above the 250/500K is taxable. Nice!


    I agree, consulting with a professional tax adviser about your particular situation is a good idea.

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