Comments on: Capital Gains on a Primary Residence

By: John

John — Thu, 16 Apr 2009 11:43:16 +0000

Hello,
Due to State Department back-to-back overseas assignments we have only managed to live in our house 17 months in 10 years (10 years expires 09/09). Our tenants are moving out and we want to sell it. Can we prorate the time spent there? Or could the hardship provision be used – we didn’t elect to stay overseas we were assigned.
Thanks,
John

By: John Crawford

John Crawford — Mon, 05 May 2008 13:43:43 +0000

My fiancee sold her interest in a house to the co-owner, who refinanced and bought her out. She meets the ownership and use requirements, having lived in the house for 4 years. She realized about a $50,000 gain over her investment.

What period of time does she have to reinvest in another residence to avoid paying capital gains tax?

Can she avoid capital gains taxes in any other way?

By: Tim

Tim — Fri, 25 Apr 2008 00:09:33 +0000

What constitutes a sale? Here is my problem.
I moved to a new house 2 years ago. My son moved in to my old house and is renting if from me. He now wants to buy it. I need to sell by May of 2009 or pay the taxes. He will not be financially ready to purchase it that soon. Can I deed it to him on paper and record the sale before my deadline, have him make my payments on a wrap, have a contract of sale with him until he can afford to get new financing. I can see some potential flaws with my idea, but would like some advice doing this properly. I do not want to boot him out in a year, but I certainly do not want to pay all the taxes either.

By: ARDELL

ARDELL — Sun, 16 Mar 2008 16:51:38 +0000

Edwin and Vic,

The short answer is no. That’s an old rule that went out about ten years ago, as I recall. Bigger home has nothing to do with capital gain taxes anymore. Consult an accountant, but I believe the general rule is still “must have lived there 2 of the last 5 years”. As with anything in life, there are exceptions.

By: edwin

edwin — Sun, 16 Mar 2008 14:33:30 +0000

i want to sell my home to buy another bigger home can i sell it before the 2 years if i reinvest in a primary residence and not pay capital gains?

By: vic

vic — Thu, 20 Dec 2007 18:36:36 +0000

i want to sell my home to buy another bigger home can i sell it before the 2 years ie 1 year 6 months if i reinvest in primary residence and not pay capital gains?

By: Dustin

Dustin — Mon, 16 Jul 2007 23:33:15 +0000

Mark,

I’m not sure of the answer for you… I imagine a tax accountant and/or lawyer would be the best place to get that kind of info.

By: Mark

Mark — Mon, 16 Jul 2007 19:26:01 +0000

What proves residency? Is it tax filing address? Does one also have all other records changed, such as driver’s license? Example is I own an apartment in NYC. I changed my address to my country house address, as I will retire, even though I currently still work in NYC and still live in my apartment there 5 days per week. I also now serve jury duty at my country address, have my license addressed in the country etc. It turns out I will not sell my apartment as soon as expected, and will have to change my residency back to NYC for a year, or so, to meet the residency requirement. As long as my employment address, and tax filing address are NYC will I be OK for the exclusion?
Thanks

By: Matt

Matt — Thu, 22 Jun 2006 17:08:28 +0000

The timeframes for the 1031 are as follows:

45 days – Time to identify potential replacement property after the benefits and burdens of the relinquished property (property you are selling) have been transfered to the new owner (usually at closing)
180 days or until your tax filing due date (whichever is less) – to close and take title to any or all identified property

These rules are hard and fast and many related rules apply as well.

One thing to keep in mind is this…as per a new ruling by the IRS…if your principal residence was a replacement property in a 1031 exchange, you must now hold that residence for 5 years before you are able to take affect of section 121 exclusion!

By: Noah

Noah — Tue, 20 Jun 2006 17:22:51 +0000

Sorry for the delayed comment.

Yes, agreed with Russ & Leslie too! The 2 out of 5 years primary residence tax exclusion has no timeframe whatsoever to reinvest, and as
Leslie points out, the other tax benefit (1031 Exchange) is more for those speculative investors, flippers out there who do NOT meet the primary residence requirements, but can still DEFER PAYMENT ON TAXES as long as you SHOW INTENT TO BUY within 180 days of closing (can someone please confirm this timeline?).

Not sure about the hardship provision.