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Capital Gains

We have a somewhat unique scenario and I'm a little confused about capital gains.

Our situation:  We are selling the home we've lived in for 18 years. My husband built it before we were married so the mortgage and title are in his name only. I am purchasing our next home with my VA benefits and the mortgage will be in my name only.

My questions:

1. Am I correct in assuming that we qualify for the CGT exclusion because we have lived in it for more than a year?
2. Do the exclusion mean that we won't ever have to pay tax on the gain or is it really just "deferred" for a period of time?
3. If we have to put the gain into a new property within a certain timeframe, can we essentially put the money from a property he owns into a property I own?

Thanks so much for any help you can give.
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October 08 2013 - Columbus
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Answers (1)

Profile picture for wetdawgs
The short synopsis is below, but please get the details from the irs website and a tax accountant: 

If both of you have lived in it as your primary residence for at least TWO of the last five years, a married couple can exclude up to $500,000 of capital gains ($250,000 for singles).  You don't pay tax on it, period.  There are no deferred taxes on that portion.  

If you (as a married couple) have capital gains of > $500,000, then you pay capital gains tax on the amount > $500,000.

Capital  gains on your primary residence cannot roll over into a new property (i.e. trying to delay capital gains taxes).  That approach went away in the late 1990s.     Of course, I suspect you (the two of you) have substantial equity and of course you can use that for the new home.

A fact on capital gains taxes that many forget is that those who deferred capital gains by rolling it into a new property (an approach  that ended in the late 1990s) still have to include that deferred gain into their gain on a sale today.   It requires excellent record keeping on old residences.  

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October 08 2013
 
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Capital Gains
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Latest answer by wetdawgs
October 08 2013 | 1 answers
  • Asked by user342728
  • In Taxes
  • October 08 2013
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