can i sell 2 properties in one year and use the proceeds for one new house and avoid capital gains taxes?

Question

sold one that we were renting out (qualified as residence since we lived in it 2 out of 5 years) now we want to upgrade and sell current home, using proceeds from both to purchase larger home...any way to avoid capital gains on one or both of these properties?

Answer 1

If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time. If you are Married Filing Jointly on your return, you may exclude up to $500,000 gain from the sale of what qualifies as your MAIN home. The gain is calculated when you take the price you sold the home for minus:
the purchase price of the home to you(or the Fair Market Value of the home when you inherited it)
Legal fees and closing costs to you when purchased
Additions and other improvements that have a useful life of more than 1 year
Special assessments for local improvements,
Amounts you spent after a casualty to restore damaged property.

After your 500k exclusion(250k if single or married filing seperately)If you have no gain, then you do not report the sale of your home on your return.

Answer 2

To exclude the gain from sale of a residence, you must meet several requirements. First off, it must be your principal residence. Then you must have lived in the home for 2 of the previous 5 years immediately prior to the sale.

Digging a little deeper into the IRS requirements at http://www.irs.gov/businesses/small/industries/article/0,,id=98921,00.html
if you own more than one home, you can only exclude the gain on your main home. That would be the home that you are currently living in. From reading that, it would appear that you would have to move back into the rental home in order to exclude the gain from its sale. However, you cannot exclude the gain that was previously depreciated.

If you have lived in your present residence for at least 2 years as of the date of sale you clearly can exclude up to $250,000 in gain ($500,000 if married filing jointly) when you sell.

I'd strongly suggest that you consult with a local tax professional on this as it is a bit of a complex situation.

Answer 3

Both answers look right. Put simply, you can only apply the exclusion on your main home. Since you have to have been in your main home for 2 years - ending on the date of sale - , you cannot have two exclusions in one year. If you sold your main home this year, you could live in it long enough to establish it a your main home, then sell it and you would be able to exclude the profits up to the limits- $250K or $500K.

Check page 102 here http://www.irs.gov/pub/irs-pdf/p17.pdf

Answer 4

Above solutions at the instant are not suitable. IRS exempts capital features from the sale of a house in case you have lived in it as your often happening place of abode for a minimum of two of the previous 5 years. you acquire your place purely one 12 months in the past, so which you of course have not lived in it for extra desirable than 2 years. circulate to the IRS internet site, and study ebook 523.