Upon selling a house how many years are you allowed before paying taxes on capital gains IF you do not buy another house?
2007-09-13 21:51:08 · 3 answers · asked by thaipassion 1 in Business & Finance ➔ Renting & Real Estate
The law has changed. If you lived in and owned the house two out of the last five years before the sale you do not have to pay taxes on the first $250 thousand ($500 for joint return) of the capital gain. It does not matter what you do with the proceeds.
2007-09-13 23:59:34 · answer #1 · answered by meg 7 · 0⤊ 0⤋
You said house not home. If you sell a house that is not your homestead then you have to pay tax on the capital gains right away or delay it by using a devise like the 1031 tax deferred exchange.
If it is your homestead and you have lived there at least 2 out of the last 5 years and your profit is less than $250,000 or less than $500,000 for a married couple and you meet a few other guidelines that most people meet...then you can just not pay any tax at all on your gain!
Talk to your accountant it is a great deal!
2007-09-14 02:57:34 · answer #2 · answered by glenn 7 · 0⤊ 0⤋
It doesn't matter whether you buy another house or not. If you qualify to exclude the gain on the sale of a personal residence, the gain is yours tax-free regardless of what you do with it. If the sale is taxable, there's no way to avoid paying the tax regardless of what you do with the proceeds.
2007-09-13 22:58:38 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋