Can I defer gain on my home sale by buying a more expensive home?
February 28, 2006
Subject: Selling my Condo
Date: Thu, 26 Jan 2006
I bought my condo for $90,000 and am selling it for $99,000. The problem is we want to close the sale on February 17, 2006 and bought the house on February 27, 2004. We would fail the two-year test. We are buying another home for $290,000, and the closing for the purchase is also scheduled for February 17, 2006.
Will we have to pay a capital gains tax, even though we are buying another property? Both are primary residences.
Date: Mon, 06 Feb 2006
The old rule of deferring a gain by buying a more expensive residence was repealed in 1997.
Unless you can change the closing date or come up with a good "unforeseen circumstance" for a partial exclusion, the gain will be taxable.
We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.
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