i bought a house less then a year ago and i am trying to sell it and get a new one?

Question

does any one know a way around the 20 -30% in tax or i think its called capital gains.

Answer 1

The only way to avoid the capital gains tax is if you are moving due to relocation for employment 50+ miles away from your current location.

Answer 2

The capital gains exemption on personal residence is met when you live in the house for 2 out of 5 years, here is a portion from wikipedia:

Exemptions from capital gains taxes (CGT) in the United States include:

* An individual can exclude up to $250,000 ($500,000 for a married couple filing jointly) of capital gains on the sale of real property if the owner used it as primary residence for two of the five years before the date of sale. The two years of residency do not have to be continuous. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. There are allowances and exceptions for military service, disability, partial residence and other reasons. See IRS Publication 523.

http://en.wikipedia.org/wiki/Capital_gains_tax

However, you can get around this using a mechanism called a 1031 exchange. You'll have to look into the exact rules for using it, and it may not work in your situation. But it's the only thing I know of that may work.

Answer 3

You will probably yield less than the capital gains penalty tax criteria.

Also, work with a Realtor to identify 1031 exchange opportunities, to avoid any potential tax liability.

As long as you're purchasing another primary residence, upon selling the current one - you should be fine and avoid any tax liability.

Best of luck.................

Answer 4

If you sell a house and buy a new one, under most circumstances you will not owe any capital gains tax.