Capital gains tax.?

Question

We want to rent a home actually rent to own, We would like to know when we sell the home we are in now we know we have equity which needs to be invested in a new home or it will be taxed. Therefore if we do a rent to own home and use the money lets say when we move in we put the equity money into the ownership of this new rental home--- will that count? the way I think it works that within the first year of us living in the new home that we have proceed with the buying of this home to use the equity money--is this correct? I hope this makes sense thank you in advance.

Answer 1

I think you are thinking of old tax law and not what is current. If you have lived in a home that you have purchased for at least two of the last five years you can make $250,000 of capital gains tax free. If you are married then it would be $500,000 tax free. The house has to have been your main residence.

The capital gains money is yours to spend on rent, buy a new house, a new boat an investment property or whatever you want with no adverse tax consequences. There are no time restraints except to have lived in the house for any two of the last five years.

Answer 2

You have to live in the home at least two years(5 years as owner) as your principal residence before you can realize any capital gains. This means you can not live anywhere else and rent that home out or have it sitting vacant for those two years. If not than................

You will be taxed because under the law it was considered an investment property.

I realize what you are trying to say but capital gains doesn't work that way.

Answer 3

I believe gains from a sales have to be reinvested in like property within 24 months. But you might want to check with a tax advisor.

Answer 4

if your single you can make 250,000 profit before its taxed or if your married its 500,000. you only need to be living in the house for 2 out of the last 5 years.

Answer 5

no---you cant use it to rent