Sorry, it should say you would want to avoid #3.

michaeljc70[at]hotmail.com (MC) wrote:

- quote -


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I want to verify, if I sell my house now with a $250K gain
(I am single) and move into another house, I pay no capital
gains (if I lived there the last 2 years).

If I were to die, would the basis of my house be the market
value at time of death (therefore my heirs would pay no
tax)?

If so, this creates what I think is an odd situation:

1) You can keep selling your house after you rack up $250K
in gains and buying another and selling after $250K gains
without paying any taxes.

or
2) You can keep the same house and rack up gains (say $500K
in this case) and die. You will owe no estate or capital
gains taxes,

or
3) You can keep the same house, sell it 1 month before you
die. You would owe $250K in taxes ($500K gain-exemption of
$250K). You would owe no estate taxes since.

Obviously, if this is true, you would want to avoid 2!

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