When we sell our home we are expecting to have about $200k in profits, we live in Michigan, do we have a limited time to re-invest this money? Can we use that to purchase land or just another home in order to avoid the capital gains tax?
The last time purchasing another home to avoid capital gains on a federal tax return was possible was in 1997. That law changed years ago.
SALE OF HOUSE
If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)
If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).
NOTE: If you have ever used the home as rental property or claimed a home office, you have more information to enter
Congratulations on the upcoming sale of your home. If you have owed and lived in your home for at least 2 of the last 5 years before the sale you can qualify for an exclusion of up to $250,000 for a single person and $500,000 for a married couple filing a joint return.
How does selling a home affect my taxes?
Tax Aspects of Home Ownership: Selling a Home
Is the money I made from a home sale taxable?