Do I owe taxes on the sale of a property I've owned less than a year?

Question

If I sell a house I've owned for six months to take a job in another state, and I roll the profit from the sale into another house of equal value, do I have to pay taxes on that?

Answer 1

The tax law has changed in thazt regard. You are citing facts relevant to the laws many years ago. Nowadays you are allowed a $250,000 per person (married) exclusion per house per two years.
So if you are married filing jointly you can exclude the first $500,000 of profit from your house sale if you did not sell another house, and use your exclusion, within the past two years.
If you are single or married filing separately, you are allowed the $250,000 exclusion of profit if you did not sell another house in the last two years.
Above $250,000/$500,000 profit, you must pay tax.

Answer 2

Rolling the profit from the sale into another house no longer has any effect on taxes - that rule went out a few years ago.

But if you sold the house because of a job move, you can take a prorated exclusion from taxes on the profits - the job move excuses you from being held to the 2 year rule. If you owned it for six months, you'll be able to exclude a little over $60K of profit from the sale ($120K on a joint return) if you haven't excluded gain on a previous house sale within the last two years. And if you had more gain that that in 6 months, well, congratulations.

Answer 3

I assume your new job is not a commuting distance from your present job (your commute would increase by more than 50 miles each way).

You will have a pro-rata exclusion. Assume you are single, and you have owned and lived in the house for exactly 1/4 of two years. Then you would be able to exclude 1/4 of $250,000, or $62,500 of gain.

There is a worksheet in the following publication which will exactly compute how much is excluded. If your gain is excluded, you do not enter that information into your tax return, but keep records.

http://www.irs.gov/pub/irs-pdf/p523.pdf
(see Reduced Maximum Exclusion)

Answer 4

since you are selling because your place of employment is changing, you can still take an exclusion on the gain, (if you move 150 miles or more) but the maximum amount of exclusion may be reduced
information is in pub 523 , link attached

look under "excluding the gain" then under "reduced max exclusion"