How do I roll over money from the sale of my house, tax free, and apply it towards my new home?

Question

I'm selling my house and I want to take all of the profits and apply it towards my new home, which I will be buying when the old one sells. I've heard of this program before. I can't remember what it's called.

Thank you all for your help!

Answer 1

The old rollover rules no longer apply, and haven't for many years. They were replaced with the $250,000.00 exclusion ($500,000.00 if married and filing jointly) on gain from sale of a personal residence. You must have lived in the property for 2 of the 5 years immediately preceeding the sale, and it must have been your primary residence, not a vacation home or investment property.

If your gain is less than $250,000 or $500,000 as appropriate, you can do anything you wish with it, tax free, including purchasing a new home.

If your gain exceeds the $250k or $500k, you will have to pay tax on that. It will be treated as a long term capital gain which is taxed at 15% instead of your marginal tax rate.

There are two exceptions to this, though they rarely apply. One is a "like exchange" sometimes called a 1031 exchange. The other is an involuntary conversion such as fire or flood. Contact a tax professional if either of these might apply.

Answer 2

The rule is that you live in your primary residence 2 of 5 yrs and sell it with no tax due on the profit up to $250,000 single or $500,000 as a married couple.

The beauty of the deal is you do not have to reinvest any of it or as much as you want there still is not tax due as long as you met the requirements. You can own 2 homes, one is primary another a vacation home. Suggestion: sell the primary home a yr before retirement for no tax on the gain up to the limits and then claim the vacation home as primary for 2 yrs. then sell it and pay cahs for the final dream home.

You may do it again and again with no limits other than the residency requirements and the cap on the exemption from taxes.

Answer 3

Live in your current house for 2 years (must be your primary residence) and you do not have to pay taxes on $250,000 (if single) of the profit ($500,000 if married). You might be thinking of a property exchange (I believe it is called 1031 exchange).

Answer 4

Depends on your profits and the state you live in, but generally if it's less than $250k profit then you have 2 years to roll that into another property. avoid all taxes.

Answer 5

1031 exchange if you qualify. Or if you have been in your home for 2yr or more you can keep up to 250k tax free if your single or 500k married. The key is the 2yr duration. Good luck.

Answer 6

Go to your nearest IRS office and talk with an IRS representative. The service is FREE! Contrary to popular belief, the IRS is "not out to get you". Also, go to your State Tax Commission Office, and talk to them. State laws vary.


If you are not satisfied with the advice the IRS or your State Tax Commission Office gives you, contact a Tax Lawyer. He/She is not free.

Answer 7

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Answer 8

You have two years to do that.
Just buy the new house and it's a done deal.

Answer 9

Bostonian is correct.