Selling my house, but not immediately buying another one: Will get spanked on taxes? (sales)

[tekgirl]

Hi. I'm selling my home and moving out of state. I won't immediately be investing in another property as I'd like to rent for a year to acclimate to the area. I've heard there is some sort of tax (that is especially high in NY) if you don't immediately re-invest in property. I'm not sure what it's called or even how to google for more information. Can somebody fill me in on this??

[Hemlock140]

Capital gains tax.That has changed, you need not pay federal tax any more up to a limit of $250,000 profit ($500,000 on a joint return) however check to see what your state law is.

[jjinla]

I think that you are talking about a 1099 exchange. You'll want to consult a RE attorney to get the details.

[onyx1361]

JJ, I think it's called a 1031, but the like/kind exchange should only apply to sales that are not the seller's primary residence (i.e. not investment property).

Tekgirl, as long as you meet the following restrictions, you should walk away tax free:

--If you are single and the gain on the home is less than $250,000
--If you are married and the gain on the home is less than $500,000
--You have to own the home and it has to be your “primary residence” for two of the previous five years

Only a gain over and above those amounts would be subject to cap gains tax. So if you clear $300k, only $50k of it is subject to tax.

And if you're lucky enough to be walking away with over $250k profit on the sale of your home in this market, then a lil' cap gains tax won't hurt ya .