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inthesunsd
New Member

I recently sold a home that I owned for less than two years and immediately purchased another. Am I exempt from capital gains because I used the proceeds to purchase?

Previous to my last home sale I sold another home which I owned for over two years.
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jerry2000
Alumni

I recently sold a home that I owned for less than two years and immediately purchased another. Am I exempt from capital gains because I used the proceeds to purchase?

No, you are not. The ability to defer capital gains by buying another house was removed from the tax code in 1997 by the Taxpayer Relief Act. Since that time, you can not defer capital gains on a home by buying one of equal or greater value. What you can do, if you owned and lived in the home for 2 of the 5 years ending on the sale date, is to not have to pay tax on a gain of up to $250,000 (Single), or $500,000 (Married Filing Jointly). Note that if you ever used the home as a rental, then the exclusion does not apply to any gain equal to the depreciation that you claimed or could have claimed.

For further info, see IRS Pubs, 530, 523, and 17

http://www.irs.gov/pub/irs-pdf/p530.pdf

http://www.irs.gov/pub/irs-pdf/p523.pdf

http://www.irs.gov/pub/irs-pdf/p17.pdf


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2 Replies
jerry2000
Alumni

I recently sold a home that I owned for less than two years and immediately purchased another. Am I exempt from capital gains because I used the proceeds to purchase?

No, you are not. The ability to defer capital gains by buying another house was removed from the tax code in 1997 by the Taxpayer Relief Act. Since that time, you can not defer capital gains on a home by buying one of equal or greater value. What you can do, if you owned and lived in the home for 2 of the 5 years ending on the sale date, is to not have to pay tax on a gain of up to $250,000 (Single), or $500,000 (Married Filing Jointly). Note that if you ever used the home as a rental, then the exclusion does not apply to any gain equal to the depreciation that you claimed or could have claimed.

For further info, see IRS Pubs, 530, 523, and 17

http://www.irs.gov/pub/irs-pdf/p530.pdf

http://www.irs.gov/pub/irs-pdf/p523.pdf

http://www.irs.gov/pub/irs-pdf/p17.pdf


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inthesunsd
New Member

I recently sold a home that I owned for less than two years and immediately purchased another. Am I exempt from capital gains because I used the proceeds to purchase?

Thank you Jerry for the quick and detailed response.
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