homes sale timing

Discussion in 'General Tax Discussion' started by Kallen_Web_Design, Jul 3, 2018.

  1. Kallen_Web_Design

    Kallen_Web_Design

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    We have purchased a new house and plan to list our current house for sale in the spring. Because of the location it might take 2-4 years to sell. This house will be quite profitable. A neighbor told me there is a (new?) rule about only having the profit on the sale tax free if you live in it 3 of the last 5 years. Does it make sense to sell it for less than we would like before that 3 years is up to avoid the taxes on the profits? Are there other considerations?
     
    Kallen_Web_Design, Jul 3, 2018
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  2. Kallen_Web_Design

    kirby VIP Member

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    Summarizing your statements
    1: Selling the house will be quite profitable
    2. It can take 2 - 4 years to sell
    3. You must have lived in former home 3 of last 5 years (to exclude up to $500K of gain for a married couple - not truly "tax free")

    Your risk exposure is to the length of time it takes to sell the old house. So IGNORING EVERYTHING ELSE - putting old house on the market NOW makes sense. Note though - you really need to run this by a tax pro who can consider your complete tax situation. For example, if you can rent out old house for a huge monthly amount, that changes everything.
     
    kirby, Jul 5, 2018
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  3. Kallen_Web_Design

    bklynboy VIP Member

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    Sell right away. You have no idea what the house will fetch down the road - could be more could be less. Unless you want to retain as an investment and rent I don't see why you would keep it and continue to have carry costs and potential downside when you want to sell later.

    For my benefit - why does it take 2-4 years to sell? What location is this (is it on the moon?)
     
    bklynboy, Jul 5, 2018
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