I sold my home that i lived in 2yrs and purchased another with that money i made at sale my question is : what

Question

Will tax relief be given in this case as long as the money was rolled into a new homestead purchase of greater the value ?

Answer 1

Well I had to change my original answer as it was off base.

Wayne is correct. Also you can avail yourself on this capital gains exclusion benefit every time you sell you home after you have lived in between 2-5 years.

You can read IRS Publication 523 for more information.

Answer 2

There are two variables relevant to your transaction, and neither has to do with the use of proceeds. One is your status insofar as being a single or married person, and the other is the length of time you spent in the house you just sold.

You need to verify this part of my answer, because I'm not stating with certainty that the relevant period is 2 of the past five years, or three of the past five years, but if you satisfy whichever of these it is, the gain on your sale becomes eligible for a capital gains tax exclusion. If you are single, $250,000 above your cost basis can be excluded, and capital gains tax paid on the amount great than that; if you are married, the amount excluded is $500,000. Remember that there is a limit to the frequency with which this exemption can be invoked - that is, you have to have lived in the house in question for the requisite period.

Answer 3

The first poster, Wayne Z is absolutely correct if this is a PRIMARY RESIDENCE. Where some folks get confused is whether or not the home is a primary or secondary/rental/income property. If it is an income property, then there is tax-deffered savings through a 1031 exchange IF the property is "exchanged" for one of 'like-kind' and of greater value.

For a primary residence, $250,000 for a single and $500,000 for a couple is tax-free if you've lived in the home for the qualifying amount of time (i.e. if you lived in the home for the last 2 *consecutive* years, then you surely qualify).

Answer 4

If you lived in the house over 2 years, the first $250,000 ($500,000 if married) in gains are tax free. The fact that you rolled the money into a new home is irrelevant. That rule went away in 1997.

Answer 5

I can't answer your question, but I did want to say that my neighbor sold me his house this Sept., and he got about $60k in tax relief by rolling, so the first poster is actually NOT correct.

Answer 6

Wayne Z is correct