2006-09-20 07:35:12 · 4 answers · asked by lady_6971 1 in Business & Finance ➔ Taxes ➔ United States
Just to add to what Barometer Soup said you cannot just sell a business/rental/investment property and within 45 days decide that you want it to be a 1031 "like-kind" exchange and buy another property. You must use a Qualified Intermediary to conduct the transaction so that the funds never actually come to you. I can provide more details if this is the nature of your question, butit appears it is more related to a personal residence which is a covered by the first two answer (live in the property 2 of the last 5 years and take a $250k or 500k exemption under section 121 of the IRC)
2006-09-20 14:52:42 · answer #1 · answered by FlCpa 3 · 1⤊ 0⤋
In addition to the correct information provided by Barometer Soup above you may also be interested to know that you may exclude from any gain you make ( $500,000 if you are married and $250,000 if you are single). The gain can be a complex calculation which I would strongly suggest you leave to a tax professional as it could be thousands different than your guess. Basically the gain is the difference between what you bought the home for and what you sold it for, less sales cost and improvements, but it can be much more complicated depending on your circumstances. Even if you were to have a simple case it would be worth the peace of mind that you got the amount correct. The only exception would be if you clearly know that the amount could not be over the exclusion.
2006-09-20 07:57:09 · answer #2 · answered by ? 6 · 2⤊ 0⤋
If the home is your personal residence (you have lived there 2 of the last 5 years) you do not have to re-invest the money.
If the house was a rental property then you have 180 days to do a "1031 exchange". Warning: Although you have 180 days to invest in a "like kind" investment - you only have 45 days to identify and declare the new investment.
2006-09-20 07:39:26 · answer #3 · answered by Anonymous · 0⤊ 0⤋
its called Capital Gains Tax, it counts as income if you do not re-invest it within 60 days, and you have to pay income tax on the amount, it's usually about 19%, or something that rediculous. I almost had to pay it once, but we found a little "business" account to throw the money into, so we avoided the tax man that year.
2006-09-20 08:23:35 · answer #4 · answered by Robin R 2 · 0⤊ 5⤋