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?
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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?
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