Taxes/capital gains on prize house

If I win a house through a raffle, and decide to sell the house and pay the prize tax, would I also have to pay capital gains? So let's say the house is worth $450,000. The house counts as income. So let's say my tax rate is 25%. Let's say I sell the house for $450,000. So I pay my taxes of $112,500 and take the rest of the money (minus 6% for realtors' fees), $310,500 and buy a different house with it. Will I then pay capital gains since I turned around and put every leftover dollar into the new house? Or might this qualify as a like-kind exchange?

Now obviously, I can live in the house 2 years, then sell it and avoid capital gains. But, I'm trying to explore different options.

posted

No, it doesn't work that way at all. If you pay tax on the $450,000 in income, the amount on which you paid tax becomes your cost basis in the house,. Were you to sell it for $450,000 less costs of sale such as broker fees, you would actually experience a loss. What you do with the sale proceeds makes no difference.