Reinvesting Capital Gains

[Allie L]

My fiance and I each own our homes.  They are very similar in value and he plans to sell his home and invest the profit in mine (paying it off).  Will this satisfy the IRS for reinvesting the capital gains?

[Bsch4477]

There is no such thing as escaping capital gains by reinvesting the proceeds of a sale. 

[LeticiaF1]

It seems like what you are thinking is a like-kind or Section 1031 exchange.  This is when you exchange property that is held for investments or business purposes.  Since he is thinking about selling his home, he would not qualify for this because it is his personal home and not a home that he is holding for investment purposes.   

Something else that he might qualify for is the exclusion on the exclusion of gains on the sale of a personal home.  This allows an exclusion of up to $250,000 of your gain if you're filing as single, head of household, or married filing separately and $500,000 if you're married filing jointly. To qualify you must meet the following requirements:

1. Owned the home for a total of at least two years.
2. Used the home as your primary residence for a total of at least two years in the last five years before the sale.
3. Haven't excluded the gain from another home sale in the two-year period before the sale.

For more information see the following TurboTax help articles:

What is a like-kind (Section 1031) exchange?

Tax Aspects of Home Ownership: Selling a Home

@Allie L