if i sold a house in 2005, then bought one in 2006, do i have to pay capital gains taxes?

Question

i sold a property in November 2005, then bought one in october 2006. do i have to pay capital gains taxes on the house i sold in 2005?

Answer 1

The purchase of the second house doesn't have an effect on whether tax is owed on the first house, assuming these are your personal residences.

Was the first house your main residence? If not, then any gain on the sale of this house is capital gain and tax is owed.

If the first house is your main residence, and you owned it and lived in it for two of the five years before the sale, then you may exclude up to $250,000 ($500,000 if married) of the gain on the sale of the house. You can use this exclusion once every two years.

There are some special cases and other conditions which can be found in Publication 523 Selling Your Home.

http://www.irs.gov/pub/irs-pdf/p523.pdf

Answer 2

Depends did you live in the house two of the last five years. If not, you should have paid capital gains tax on your 2005 tax return. Not this years.

Answer 3

Regarding the house you sold in 05; if it was your main home and you had it for at least two years then when you sold it you could make a profit of 250,000 single or 500,000 married, filing joint, and owe no tax thereon. If you bought another home in 06 the date of purchase is when the clock starts ticking for your two years until you can sell it with no tax on whatever gain up to whatever is on the books at the time of sale.