Capital Gains Taxes

[dmr67]

If I sold a house in 2021 in Missouri and bought a home in Fl in 2022 and sold in 2022 will I owe capitals gains tax in 2024?

[TeriH]

Congrats on the moves.

In order to qualify for the home sale exemption, you would need to have lived in that home 2 of the last 5 years. There are some special circumstances that may get you around that.  Assuming you fail to meet any of these special circumstances, then yes, you would owe capital gains tax on the sale.   

Even if you don't meet all of the requirements (2 out of 5 being one), there are special rules that may allow you to claim either the full exclusion or a partial exclusion:

• If you acquire ownership of a home as part of a divorce settlement, you can count the time the place was owned by your former spouse as time you owned the home for purposes of passing the two-out-of-five-years test.
• To meet the use requirement, you are allowed to count short temporary absences as time lived in the home, even if you rented the home to others during these absences.
• If you or your spouse is granted use of a home as part of a divorce or separation agreement, the spouse who doesn't live in the home can still count the days of use that the other spouse lives in that home. This can come into play if one spouse moves out of the house, but continues to own part or all of it until it is sold.

If either spouse dies and the surviving spouse has not remarried prior to the date the home is sold, the surviving spouse can count the period the deceased spouse owned and used the property toward the ownership-and-use test.

Here's a great TurboTax article that discusses some of the finer points.

[dmr67]

Even if i moved due to Hurricane Ian?

how do I calculate the capital gains if I owe them in 2024?

[TeriH]

If the home was bought and sold in 2022, the capital gains would have been owed on your 2022 return.  I'm extrapolating, that since you had capital gains, you did not abandon the property, nor was it foreclosed.  

I'm including link for IRS publication 544.  You should review the exceptions for capital gains on home sales, to see if any qualify.

IRS publication 523 is more generic information on home sales, which you should review.

[ElizabethW2]

Hello!

That's a big move!  How exciting!

Unfortunately, the answer to your question is the classic accountant's 'it depends'. 

I am assuming the house sold in Missouri was your primary residence and you elected to exclude the qualified amount of that gain.  I am also assuming that the Florida property served as your primary residence for the months of ownership.  If those are correct assumptions, you must wait two (2) years between excluding gains on a primary residence.  So, yes, if you sell the Florida home before owning and living in it, you will have to pay tax on any gain you enjoy.  There are some exceptions that might allow you to prorate the exclusion on the Florida home, such as moving due to military orders or work. 

The capital gains tax would be due on the tax return for the year of the sale.  I'm a little unclear on whether you sold it in 2022 or expecting the sale to occur in 2024.

I hope this information answers your question.  If you found it helpful, please say "Thanks" by clicking the thumb icon below.  If you found it to be the best answer, please click on "Mark as Best Answer".

Elizabeth W., EA