hrblockhead14[at]aol.com (Hrblockhead14) wrote:

- quote -

hrblockhead14[at]aol.com told you $250K. Since you indicated
in your first question that you were married, the correct
figure would be gains of $500K.

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gaukelcreative[at]mindspring.com (House Hunter) wrote:

- quote -

Deferral of your gain into a new residence (buy or build) is
no longer an option. That provision went away in 1997.

However, if you OWNED and LIVED IN the hoouse you sold for a
minimum of two of the last five years, you probably qualify
for an EXCLUSION of up to $500,000 of gain. If you don't
meet the above qualifications (sell in less than two years),
your gain will be taxable unless you meet one of the three
exception areas for partial exclusion. See IRS Pub 523 for
the new law and the details.

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gaukelcreative[at]mindspring.com (House Hunter) writes:

- quote -

What you do with the proceeds doesn't affect the tax
treatment of your gain. How long you owned and lived in your
old home are the important facts. See IRS Publication 523.

Phil Marti
Topeka, KS

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House Hunter wrote:

- quote -

You have not given enough information to determine if it is
is a taxable transaction however...

- quote -

your assumption about what matters is not correct, and
hasn't been for over six years.

The key initial question is did you both own and use the
property as your principal residence for two years out of
the five years immediately preceding the date of sale? And,
if you did, did you sell any other house and exclude a gain
during the two years prior to the date of sale?

If the answer is yes and no, then the gain (up to $250,000
for an individual or $500,000 on a joint return) should be
excludable under Section 121. If you answered "wrong" to
either of those <grin> , then we may need more information.

You may want to review the IRS publication on the sale of
your home. But the old "reinvest the proceeds" rule is now
gone, even if your gain is more than the Section 121 limit.

An aside to the group--it looks like old Section 1034 is
going to continue to crop up for years after its repeal in
discussions, just like the old, nonfarm income averaging
still is raised from time to time by the lay population <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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If you lived in the old home at least 2 of the last five years,
you have a $250,000 exclusion on the capital gain. If you lived
in the old one for a shorter time, see a tax professional. most
likely you will have mo tax cosequenses for the sale (no real
capital gain)

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My husband and I sold our home in May 2003 at a profit of
about $20,000. We are planning to build a new one,
beginning in November, 2003, but we won't close on the new
house until next Spring.

We will use all of our profits on the new house.

Is this going to cost us a lot in taxes, since we will still
have the money in the bank at the end of the year?

If so, is there any way to avoid this?

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