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Will I Have To Pay Capital Gains On A Home Sale If I Purchase Another Home During The Same Year?
December
1 ,
2009 Posted by
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Will I have to pay capital gains on a home sale if I purchase another home during the same year? I plan to buy the new home first and then 3 to 6 months later sell my existing home, but both transactions within the same year. The home I will buy will be valued around 130K and the one I will sell will be around 80K. Any educated ideas or advice would be appreciated? Thank you.
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recycle b
December 2nd, 2009 at 1:51 am
If your home was used 100% of the time as a personal residence than all of your gain will be excluded from tax if you meet the requirements of IRC Section 121 which talks about the residency requirement of 2 out of 5 years since you are way less than the 250,000/ 500,000 gain levels. But, if you used any portion of your home as an “office in the home” and took deductions for that, then the portion that relates to the office in the home, is not considered a personal residence but a business home. It is possible that you will have some gain, if you took the deduction for office in the home.
The purchase of the new home has nothing to do with the exclusion of your gain.
Judy
December 2nd, 2009 at 8:45 am
The purchase of the new home has nothing to do with whether you owe capital gains tax on the sale of the first home – that rule has been gone for 10 years or maybe more.
If you owned the first home for at least 2 of the 5 years immediately before the sale, and lived in it as your main home for two of rhose same 5 years, you probably won’t have to pay and cg tax on the sale.
ninasgra
December 2nd, 2009 at 1:21 pm
If you have lived in your home as your principal residence for two years, and you sell it within a few months of moving out, you will pay no capital gains tax on the home.
The purchase of another home will not change the tax-free status of the sale of the first home.
You will not include any information on the sale of your home on your tax return.
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December 2nd, 2009 at 5:54 pm
The reinvest in another home rule went away over 10 years ago.
If you owned and lived in the home for 2 of the 5 years before you sold it, you can exclude the first $250k ($500k if married) of gain.
Bob F
December 2nd, 2009 at 9:02 pm
You won’t have to pay capital gains on your sold home if you lived in it for at least 2 years in the last 5 years before you sold it. Whether you bought another home before or after than is irrelevant.