Trying to understand the tax implications of selling two homes in the same year:
- 1 year ago turned primary Seattle based home into a rental and moved across state, bought a new home with cash and moved in.
- Two months ago, we closed on the sale of our Seattle home, and walked away with 499k after it was said and done. Putting us in a good tax situation to avoid capital gains as a married couple. (We lived in that house for two consecutive years within the past five years, and it has been a rental for the last year.)
- The house we’ve been living in for the past year in Spokane. We bought cash, 330k. We’ve already done nearly 40K in improvements and upgrades.
Fast forward to now, we found a new house we want to buy for 600k. We could probably buy it cash or we could pull out a small mortgage on it. We haven’t decided.
- Do we sell the house we are currently living in (14months now) and just focus on the next primary home?
- From my understanding we can not sell this Spokane one within the same time frame of selling the Seattle one and also avoid capital gains. Also, I don’t think this house would sell for much more than what we bought it for.
- Someone told me we don’t need to count it as a primary residence, but as an investment property, even though we’ve been living in it for a year.
So I wanted to ask if you could help advise us in this matter. Ideally, yes, we would love to just sell this one and only have one primary home and no more rentals. We just need to know what the tax implications are, and if we can avoid capital gains since we’ve already sold one house in Seattle and what it would look like if we were to sell this one in Spokane.
