Capital Gains on a Real Estate sale - Taxes...?

Question

I have lived in my house for more than 2 years - enabling me to avoid taxes on the gains from the sale. I know that if I utilize all the gains to aid in the purchase of another property, I do not have to pay taxes on the gains. However, my question is: do I have to pay taxes on the gains that I do not reinvest into another property? Example - say I made 100K on the sale and only want to reinvest 80K - do I pay taxes on the remaining 20K?

Answer 1

What the rules are now is if you have lived in your primary residence for 2 out of the last 5 years, you can exempt from capital gains up to $250,000 gain if you are single, and $500,000 gain if you are married and both owned the house. And that is for each time you sell a primary residence.

Answer 2

No, you do not have to pay capital gains no matter what you spend the money on, as long as you have lived in the house 2 out of the last 5 years. Up to 250K for single person and up to 500K for a married person.

Answer 3

The rule about reinvesting the gain in order to defer taxes was made obsolete when the new rules came in, so no, unless your gain was higher than the exclusion, you don't have to pay taxes now or later on the gain, no matter what you do with the money.

Answer 4

You're thinking of the old rollover replacement rule which was tossed out about 10 years ago. You no longer need to purchase a new residence to avoid the gain on the sale. The old rule wasn't an exclusion but a deferral and it no longer applies.

You may keep all of your excludable gain and do anyting with it you please without having to pay ANY tax on the gain at all.

Answer 5

PepsiLime is correct, you don't have to report any gains if you lived in your house for 2 years in the last 5 years.

Answer 6

No.

You can spend them however you wish.