Profile picture for bkc125

Home Sale ?

<p>Looking at selling, and moving into a rental location for 12-18+ months (Travel for work).  When I sell the home/townhouse and I walk away with money is there a way I can avoid paying taxes (Capital gains) after the sale.  I'm not ready to build just yet still working things out with lot/home etc.  Could I use the money to buy the lot and thus avoid the Capital gains, or do I have to move it into a construction loan to avoid (C.G. tax).</p>

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September 19 2012 - Perryville
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Answers (2)

Before selling your Townhome, I would certainly contact either a Tax Advisor OR we have an excellent Attorney on Staff that can answer your questions concerning these matters. This comes up all the time because of the type of Sellers we handle with exchanges, short sales, etc.
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September 19 2012
Profile picture for wetdawgs
It may be simpler than you propose

If you are selling and the current home has been your primary residence for two (or more) of the last five years, you may be eligible for the capital gains exclusion in the federal taxes.

If you are single, the exclusion is $250k.  If married (and both have lived in the home for 2+ years of the last five), then it is $500k.

The gain is calculated by selling price minus cost basis.    Cost basis is your purchase price plus selling fees plus costs of capital improvements (not repairs).   If you got the $8000 first time home buyers tax credit, that is subtracted from the cost basis.

Rolling over capital gains on residences is no longer allowed, it was bumped by the capital gains exclusion sometime in the late 1990s.

Please see a tax advisor to go through the specifics with your situation.  What I described is only a very general overview.   The irs website is very useful.
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September 19 2012
 
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