We sold our primary home and will be taking the tax exemption. To sell a second home in 2008 & eliminate tax ?

Answer 1

The exclusion only works when the house if your primary residence, and how it works is that you exempt gain up to $250,000 if single and $500,000 if married. If you sold your primary house in 2006, you would have to live in the 2nd home for 2 years (so some point in 2008) in order to sell it to exempt the gains again. If you sold your primary residence in 2007, then you'd have to live in the 2nd home to some point in 2009 to exempt the gains.

Answer 2

I don't understand your question.

As for tax exemption, this is not true...its not an exemption per se, but most home-sellers fall under this allowance. For an individual selling their home at a profit (capital gain), the gain in excess of $250,000 is non-taxable (this doubles if you're married). To qualify, it must be the primary residence for which you've owned & used for two years or more during the 5 year period ending on the date of the sale or exchange. Either spouse may meet the ownership requirement and both must meet the use requirement.

However, if you're selling a 2nd home, to qualify again for this exclusion, you must meet the same qualifications again...therefore to sell a 2nd home, you must have used it as a principal residence for a 2 year period.

Answer 3

You can only take the exclusion once every two years, so if you sold your most recent home in 2007, you'd have to wait until 24 months later to sell a second one and take the exclusion again. If the timing is close, it might be worth letting the house sit a month or two before putting it on the market, or delaying closing until the 24 months are up.

If you're definitely going to sell your next home in 2008, then try to figure out which will have the higher gain, and take the exclusion on that one.