home sale/exchange

[PatM58]

When selling a home with a potential capital gain, and living in for over 20 years, can all appreciated value be carried into the new home and further defer capital gain tax? I suppose this is part of the 121 Home Sale tax relief.

In addition, if the home purchased is less in value than the one sold, will capital gain be required to be pay tax on for the unutilized value.

Example (Residential homes):

Current house purchase date 4/1/1992

Current house value: $900,000. House asset value: $300,000. Closing costs: $60,000 

Purchase now home for $700,000.  

Tax filing status: Single

Can any of the $200,000 realized for sale/purchase be addressed by $250K exclusion??

THX

Patrick 

[DoninGA]

The option to defer the capital gain from the sale of a personal residence by purchasing another personal residence for the same or greater price as the sale price 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).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

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.