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Anyone know the tax laws regarding selling my primary residence? How long do I have to 'roll' the gain into the purchase of a new home?
From looking at this irs tax article it sounds as if I am exempt from gain as long as I have lived there for 2 out of 5 years. If anyone can confirm that would be great.
"To exclude gain under the rules in this publication, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale."
I would assume I would have to pay 15% capital gains tax if I didn't roll over the gain but don't know if I decided to roll it over, how long I actually have to do so.
The way I understand it is if you live in the home as your primary residence for 2 years of the last 5 you do not have to pay any gains up to $500K if your married.
Ok, thanks for the info. That too is what I gathered as well. I wonder though how long I can wait to buy a new home and avoid paying the capital gains tax.
Last edited by citydweller; 04-21-2007 at 09:46 PM..
At one time it was 18 months. Have no idea if that was eliminated, suspect it might have been. Best thing to do is ask in the reale state forum, they'll know.
I would assume I would have to pay 15% capital gains tax if I didn't roll over the gain but don't know if I decided to roll it over, how long I actually have to do so.
I am not a tax professional, but this is my understanding of the rules:
There is no more 'rollover' rule as of 1997 (part of the Taxpayer Relief Act). Even if you purchased your home before 1997, the exclusion applies. If you are selling your home, having lived in it for less than 24 months, the exclusion only applies for a prorated amount IF you had to sell under certain circumstances. If you had to relocate for employment purposes (or other 'unforseen circumstances' - don't ask how the IRS defines that), your taxes are prorated. I think there are exceptions to this rule for military families.
Now, if you've lived in your home for over two years and are single, and you realized a net gain greater than 250K in the sale of your home, you have to pay taxes on it. If you are married, the limit increases to 500K.
If you're moving just because you want to, the IRS will nail you on it. No exclusions, rollover, or proration.
my cpa said its two years within a five year period (primary residence)
i have two houses, so i claim both for two years within the five yr period and still be considered primary residence.
If you go to the real estate section of the Washington Post's website, there is a section called "Real Estate Mailbag" and it covers all that sort of stuff in great detail. They have an expert who answers questions.
How does the capital gains law work for people who are flipping houses? Do they just have to keep doing a 1031 exchange?
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