Hello,
I am wondering if I have to pay capital gains tax on the proceeds of my home that I recently sold. We lived in it for ~ 4 years and sold it. We are looking to build a new home, but it will not be finished by the end of the year. I plan to roll the proceed over into the down payment of the new home, but it will not be finished till next year. Will I have to pay capital gains on these funds?
Any guidance would be appreciated,
Thanks,
David
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The requirement to purchase another primary home after the other home was sold to defer any capital gains was removed from the tax code in 1997.
If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).
If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.
Hi David,
It depends on how long you owned and lived in the home before the sale and how much profit you made.
The law lets you "exclude" this profit from your taxable income. (If you sold for a loss, though, you can't take a deduction for that loss.)
I hope this helps. Thank you for contacting TurboTax. Have a great day!
-Wayne
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