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Old 10-08-2017, 09:41 AM
 
Location: Houston, TX
8,895 posts, read 20,002,567 times
Reputation: 6372

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We are potentially buying a new construction home this year and will close in November or December of 2017 while we still own the current home which will be put up for sale as soon as we move out so most likely the home we are moving out of won't sell Until 2018.

By doing this, will we face unnecessary tax penalties -- Buying in 2017 and selling existing in 2018.
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Old 10-08-2017, 09:50 AM
 
1,237 posts, read 2,020,071 times
Reputation: 1089
If you have a capital gains tax due from the sale of the old home, it will be due in the year you have the gain, i.e. the year of the sale. The purchase has nothing to do with that.

However, under most circumstances under Section 121 capital gains under $250k (or $500k if married filing jointly) can be excluded. You do have to meet some criteria to qualify for the exclusion.

https://www.irs.gov/taxtopics/tc700/tc701

This is a good starting place for the rules and guidance. Some of the links provided on this webpage I would also suggest as required reading.
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Old 10-09-2017, 02:18 PM
 
Location: Sugar Land
64 posts, read 102,593 times
Reputation: 40
I'm a CPA and real estate agent, buying in 2017 and selling in 2018, will be quite favorable on your 2018 tax return, you will be able to claim the homestead exemption in your new house for the full year and like the previous poster said your gain on sale will be exempt assuming you meet the criteria.

Quote:
Originally Posted by texas7 View Post
We are potentially buying a new construction home this year and will close in November or December of 2017 while we still own the current home which will be put up for sale as soon as we move out so most likely the home we are moving out of won't sell Until 2018.

By doing this, will we face unnecessary tax penalties -- Buying in 2017 and selling existing in 2018.
Reply With Quote Quick reply to this message
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