topic We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax? in Deductions & credits

We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax?

gkugler13 — Wed, 14 Oct 2020 17:44:22 GMT

If we don't find a home till 2021 will that cause problems on 2020 taxes?

Re: We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax?

VolvoGirl — Wed, 14 Oct 2020 17:47:07 GMT

You can no longer roll over the gains to a new home (since 1997). And that was only on your primary house. Sorry it's taxable.

Re: We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax?

VolvoGirl — Wed, 14 Oct 2020 17:51:50 GMT

A second home is entered like an investment. Here is the FAQ and steps for 2019. Should be the same for 2020

https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-the-sale-of-a-second-home-an-inherited-home-or-land/00/26433

Re: We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax?

Anonymous — Wed, 14 Oct 2020 19:56:27 GMT

if you want to defer the gain consult with a real estate attorney. generally, you would have to rent out the house for 6 months to a year (that's where the attorney comes in so he can give advice on how long you may need to rent it) The IRS does not have to agree with the attorney. Assuming the rental is successful then you can do a 1031 exchange (talk to the attorney about this as part of deciding whether to bite the bullet or defer the gain thru the 1031 exchange. 1031 exchanges are costly. there are substantial fees involved. the attorney can give you an estimate. also, an attorney can make sure if you decide on a 1031 that all the i's are dotted. miss one and the exchange is no longer tax-deferred. i saw on taxpayer ask about doing a 1031 after he received the proceeds (directly) - he could not

Re: We have a second lake home not our permanent home we would like to sell. We have not found a replacement home yet. If we sell, how long do we have to buy a new home to avoid paying capital gains tax?

Anonymous_ — Wed, 14 Oct 2020 20:07:18 GMT

The IRS offers a safe harbor for 1031 exchanges (see the link below to the Rev. Proc.).

https://www.irs.gov/pub/irs-drop/rp-08-16.pdf

Regardless, professional guidance is virtually mandatory before making any decisions.