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Can I avoid taxes on the sale of my house by buying a new home?

June 23, 2004


Subject:  Short Term Capital Gain on Sale of Home
From:  Naomi
Date:  Wed, 19 May 2004

Hello Mr. Gray,

I sold my half of a house that I had for a little over one year because the relationship ended. I heard that if you buy another home within a certain amount of time, you do not have to pay short term capital gains. Is this true? And if so, how much time do I have to buy another property?

Thank you,
Naomi

Answer

Date:  28 May 2004

Hello Naomi,

No. Someone may be thinking about rules that were repealed in 1997.

However, you may qualify for an exception allowing part of the exclusion for gain from the sale of a principal residence due to an unforeseen change in circumstances. See Treasury Regulations Sections 1.121-3 and 1.121-3T or IRS Publication 523, page 15.

Good luck!
Mike Gray

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.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Can I avoid taxes on the sale of my house by buying a new home?

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