capital gains, home, publication 523


B

brock57

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I seed that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?

My scenario is this: Last January I moved into a one
bedroom condo where I have been living alone since. This
July I will be getting married, and it is apparent that my
fiance and I will need a larger home. So... if I were to
sell before my two year point at my condo and reinvest all
of the gains from the sale into a new home, would I still
have to pay capital gain tax?

Like I said, I know that in 1996 or earlier - I would not.
Any help would be greatly appreciated.

Thanks,
Brock Heinz
 
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D

Dick Adams

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I see that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?
No, it is no longer true.

When you write "I've been doing my research", I shudder.
Are you qualified to do tax research?

I need to have surgery on my back. Did I "do my own"
research"? Hell, no! I am not qualified to do medical
research. But I did get a second opinion from another
orthopedic surgeon.

Dick
 
A

A.G. Kalman

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I seed that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?
No. That law was repealed and replaced by the $250K/$500K
(single/married) profit exclusion available once every two
years.
My scenario is this: Last January I moved into a one
bedroom condo where I have been living alone since. This
July I will be getting married, and it is apparent that my
fiance and I will need a larger home. So... if I were to
sell before my two year point at my condo and reinvest all
of the gains from the sale into a new home, would I still
have to pay capital gain tax?
In order to avail yourself of the $250K profit exclusion,
you have to have owned the home for at least two years when
looking back five years from the date of sale AND you must
have used that property as your main home for at least two
years using the same look back period. The tax authorities
no longer care what you do with the proceeds from the sale
of your main home. See IRS Pub 523 for details on all the
rules and certain exceptions.
http://www.irs.gov/publications/index.html
 
R

Rich Carreiro

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I seed that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?
No, it is not. If you fail to meet the criteria for
excluding the gain (the two-years-in-five rule) or for
getting a partial exclusion (the unforseen circumstances
rule), the entire gain is taxable and there is no way to
avoid it (aside from offsetting the gain with capital
losses).
 
S

smithff33

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I seed that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?>
NO. The law changed in 1997.
My scenario is this: Last January I moved into a one
bedroom condo where I have been living alone since. This
July I will be getting married, and it is apparent that my
fiance and I will need a larger home. So... if I were to
sell before my two year point at my condo and reinvest all
of the gains from the sale into a new home, would I still
have to pay capital gain tax?
Getting married is not an "unforseen situation", so you
would get no exclusion on any capital gains realized at
sale. Since you owned the house for over one year you will
only pay LT capital gains tax. There is no longer (since
1997) a deferment of gain to a subsequent home purchase.
 
A

Arthur L. Rubin

I've been doing my research, and I've come across a bunch of
great articles, but not quite what I've been looking for.
In 1997, I seed that the capital gain laws when selling a
home have changed. In the past it was apparent that one
could take the profits from one home and not pay the gains
taxes so long as they used that profit to purchase another
home. Is that still true?

My scenario is this: Last January I moved into a one
bedroom condo where I have been living alone since. This
July I will be getting married, and it is apparent that my
fiance and I will need a larger home. So... if I were to
sell before my two year point at my condo and reinvest all
of the gains from the sale into a new home, would I still
have to pay capital gain tax?
There's an "unforseen circumstances" clause, which would
allow you to have part of the $250,000 exemption. Whether
marriage is an "unforseen circumstance" is another matter,
and I haven't checked the precise wording of the regulation
or case law.
 
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P

Phil Marti

Like I said, I know that in 1996 or earlier
You said it twice, so you know the answer: you work from
the current rules, not the rules that were previously in
effect.

Phil Marti
Clarksburg, MD
 

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