topic How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ? in Deductions & credits

How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ?

ftovar21 — Tue, 10 Mar 2026 06:44:50 GMT

Re: How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ?

NCperson — Fri, 18 Nov 2022 11:19:40 GMT

@ftovar21 - one has nothing to do with the other. The rules you are referencing went out the window 25 years ago. The fact that you sold your home makes you subject to potential capital gains tax. Whether you are going to buy another house or not is immaterial.

How much was the capital gain on the home you sold?

Did you live in the home at least 2 of the past 5 years? you get an exemption of $250,000 ($500,000 if filing joint) from capital gains if you meet this requirement

Re: How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ?

Carl — Fri, 18 Nov 2022 13:11:36 GMT

When you sell your home, what you do with the proceeds is immaterial. If you have a gain, it's taxable. Period.

However, if you qualify for the "lived in as my primary residence for 2 of the last 5 years I owned it" rule, then you can exclude up to $250K ($500K if filing joint) from being taxed. Basically, if the home was your primary residence for at least 730 days of the last 1826 days you owned it, counting back from the closing date of the sale, then you would qualify for this exception. See page 2 of IRS Publication 523 at https://www.irs.gov/pub/irs-pdf/p523.pdf starting in the 2nd column, section titled "Does Your Home Sale Qualify for the Exclusion of Gain?"

Re: How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ?

xmasbaby0 — Fri, 18 Nov 2022 13:20:32 GMT

The last time it mattered whether you reinvested in another home to avoid capital gains tax from selling your home was in 1997.

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).

If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

Re: How long do I have to not pay taxes on my capital gains from selling my home by buy a new home? Can I just be under contract or does it have to be closing ?

Opus 17 — Fri, 18 Nov 2022 14:46:11 GMT

If you have a lump sum of income during the year, you may be required to pay make an estimated tax payment. The tax system is pay as you go, and if you don’t pay during the year, you can be assessed a penalty for under payment, even if you pay in full when you file your tax return.

For income received between January and March, the estimated payment is due April 15. For income earned in April or May, the estimated payment is due June 15. For income received from June through August, the estimated payment is due September 15. And for income received between September and December, the estimated payment is due January 15 of the next year.

you first need to determine how much capital gain you have. Then, determine how much of that gain is taxable, based on whether or not you qualify for the exclusion. Then, the taxes on the capital gain will either be 15% or 20%. That is the size of the estimated tax payment you should make now, to avoid a penalty later. If you overpay the estimate, the difference will come back to you as part of your tax refund.

Captial Gains on sale of home

Lucky2142 — Fri, 24 Feb 2023 16:44:03 GMT

If I've been in my house for 18 months and go to sell it will I have to pay capital gains on the full amount or is it prorated for the time over 1 year. Also can you deduct home improvements done while living there from the amount gained?

Re: Captial Gains on sale of home

JosephS1 — Fri, 24 Feb 2023 17:12:27 GMT

Yes, you will have to pay capital gains if you sell if after only living in it for 18 months but what you are envisioning is not correct. When you sell your house, the gain will be based on Sales proceeds less expenses of sale (commissions, etc.), less cost of the residence (original cost plus improvements since purchase).

The example would be similar to this, please remember dates and amounts are for example purposes only:

Purchase Date - July 1, 2020

Sale Date - December 31, 2022

Length of ownership 18 months. Not qualifying for exclusion but qualifying for long-term capital gain treatment

Purchase Price - $100,000

Closing costs at purchase (not including pro-rata real estate taxes) $5,000

Improvements made $20,000

Total Cost Basis $125,000

Sales Price - $150,000

Less closing costs $15,000

Net Sales Proceeds - $135,000

Taxable Capital Gain - $10,000 ($135,000-$125,000)

Sale of Residence per IRS

@Lucky2142

Re: Captial Gains on sale of home

Mike9241 — Fri, 24 Feb 2023 17:56:15 GMT

you should not post your question from other threads. things can get confusing. you are selling your home after 18 months. there may be a partial exclusion available if the principal reason is any of the following

if you think you qualify posy back with reason as per below and provide as much detail as you can

1) employment change - there is a distance requirement to qualify

2) health - certain conditions must be met

3) unforeseen circumstances - numerous possibilities