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sf2009
New Member

When do you have to pay taxes on proceeds from selling your home? Is there a time limit and does the money have to be used on another home?

 
3 Replies
Hal_Al
Level 15

When do you have to pay taxes on proceeds from selling your home? Is there a time limit and does the money have to be used on another home?

Q.  When do you have to pay taxes on proceeds from selling your home? 

A.  On your tax return for the year you sell it.  But, under certain conditions (and amount), you may exclude the gain on the sale of your primary residence*.

 

Q.   Is there a time limit?

A. Yes, see below.

 

Q. Does the money have to be used on another home?

A.  No.  That's an old rule for about 1998.

 

*The capital gain on the sale of your primary home is not taxable (up to $250K, $500K married). To be eligible you must have lived in and owned the home for at least 2 out of the 5 years prior to sale. You do not even need to report it on your tax return, unless you got a tax document, usually a 1099-S. The 1099-S may have been included in your closing documents, instead of arriving in the mail, in Jan. or Feb. of the following year.

 

 

Mike9241
Level 15

When do you have to pay taxes on proceeds from selling your home? Is there a time limit and does the money have to be used on another home?

if you ever rented out the house and took or should have taken depreciation, you are required to report the sale. any gain up to the amount of depreciation taken or should have been taken is taxable. 

TomD8
Level 15

When do you have to pay taxes on proceeds from selling your home? Is there a time limit and does the money have to be used on another home?

If you have a large capital gain from the sale of your home (for instance, if you don't qualify for the $250K/500K capital gain exclusion), you may want to make one or two estimated tax payments so as to avoid a large tax bill next April.

But any tax you might owe isn't due until the due date of your 2021 tax return.

 

If you want to make any advance payments, you can do so online at:  https://www.irs.gov/payments

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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