Buy primary home before selling original primary home - Capital gain taxes


R

rajesh

If I buy a property before selling my primary home can I still write
of my capital gains? This is a reverse mode. Normally when a primary
home is sold one can write-off gains during next primary home
purchase. Here I am thinking of buying a new home using personal
finances and then sell my existing primary home to move in the new
one. Considering in this transaction new home will be bought before my
old primary home sold-it can take me 2/3 months to sell my original
home, can i still write off gains in selling original primary when I
file taxes.
 
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P

PeterL

If I buy a property before selling my primary home can I still write
of my capital gains? This is a reverse mode. Normally when a primary
home is sold one can write-off gains during next primary home
purchase. Here I am thinking of buying a new home using personal
finances and then sell my existing primary home to move in the new
one. Considering in this transaction new home will be bought before my
old primary home sold-it can take me 2/3 months to sell my original
home, can i still write off gains in selling original primary when I
file taxes.

The rules have changed. As long as you live in a house as your
primary residence 2 out of the past 5 years, you don't have to pay tax
on the first $250,000 or cap gains (individual) or $500,000 of cap
gains (joint). This is regardless of whether you buy another house or
not, or when you buy another house.
 
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D

D. Stussy

rajesh said:
If I buy a property before selling my primary home can I still write
of my capital gains? This is a reverse mode. Normally when a primary
home is sold one can write-off gains during next primary home
purchase. Here I am thinking of buying a new home using personal
finances and then sell my existing primary home to move in the new
one. Considering in this transaction new home will be bought before my
old primary home sold-it can take me 2/3 months to sell my original
home, can i still write off gains in selling original primary when I
file taxes.
You're thinking old law (pre-1997), and even then, the rule for the
carryover of basis was a the purchase of a replacement property within 2
years, which meant BEFORE OR AFTER.

Under current law, replacement is not needed. As long as you used it as
your primary residence for 2 of the past 5 years (for which the courts have
counted days - 730 days required), you get up to a $250k exclusion ($500k
if married filing jointly).
 

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