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posted Nov 16, 2022 5:43:06 PM

Capital Gains Reinvestment

Hello, I sold some vacant land that I held for over 1 year in June of 2022. Earlier in the year I started construction on a new home (non primary residence). Would I need to close on the new home within 180 days of the property sale to safely re-invest my capital gains or would the fact that I've begun construction on the new home suffice?

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2 Replies
Level 15
Nov 16, 2022 5:55:23 PM

Reinvesting the gain from the property sale in a new home does not have any effect on the tax on the gain. The sale of the land is a separate transaction. The tax on the gain will be the same, no matter what you do with the money.

 

Level 15
Nov 16, 2022 10:28:09 PM

you are probably thinking of a section 1031 exchange.  your home would not be qualified like-kind property.  in the future, consult an attorney if you seek to do a 1031 exchange. there are many rules that must be followed and you do not appear to be aware of them.