Howdy wrote:

- quote -

Yes. The replacement home requirement disappeared in 1997.

- quote -

The period of limitations for amending the return? There is
no "3 year period" pertaining strictly to this type of
transaction.

- quote -

If another sale of residence occurred that qualified and 2
years hadn't passed yet. Presumedly, its gain would be
more, else changing which sale qualified wouldn't make
sense.

- quote -

With postponement, you pay SOMETIME in the future. With an
exclusion, you NEVER pay.

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"Howdy" <nospam[at]nothere.com> writes:

- quote -

Yes.

- quote -

To which "three year period" are you referring? Are you
talking about something that existed during the pre-1997
era?

- quote -

(1) The IRS was able to prove you in fact didn't meet the tests
you claimed you did.
(2) Congress changes the law such that you'd have to. I wouldn't
worry too much about that one :-). If Congress ever tried
something like that, you'd see marches in downtown DC that
would make civil rights marches and Vietnam war protests
look like nothing.

- quote -

Doesn't matter. Gain postponement was repealed May 1997.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Howdy wrote:

- quote -

The old replacement deferral has been out of the law since
1997. There is no requirement to purchase a
replacement--and, in fact, if your gain is more than
$250,000/$500,000 you cannot defer tax on that excess by
replacing the property. The old deferral rule had no upper
amount limit on the amount that could be deferred.

- quote -

I'm not sure there is what you mean, but essentially you can
elect in or out of Section 121 treatment for three years
following the due date of the return on which the gain would
be reported.

However, I have my doubts you really meant something that
technical. I wonder if you are talking about the
qualification rules (having owned the property and used it
as your principal residence for two years out of the five
immediately preceding it). That creates a "three year"
period if you move out during which you could still meet the
test to exclude the gain.

- quote -

Only if you weren't eligible for the exclusion and the IRS
brings that up on examination *OR* you voluntarily elect
later to not use Section 121 on that sale. The latter you
might do if you sold another qualifying residence within two
years of the first sale and the tax on the second sale would
be greater.

- quote -

The old "postponement" section (1034) has been repealed and
hasn't been around since 1997. The difference is that with
the exclusion, you do not pay any tax and you do not adjust
the basis of any other property you might acquire. The one
problem is that the exemption is capped, so if you have a
gain greater than that amount you will end up with having to
pay tax--something that you could have avoided under old
Section 1034.

--
Ed Zollars, CPA
Phoenix, Arizona

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Howdy <nospam[at]nothere.com> wrote:

- quote -

If they owned and lived in this home as their main home for
at least 2 of the past 5 years, they can exclude $500,000 of
capital gains form thie sale.

Two years later they can repeat the process.

But there is no requirement to buy another house if you
don;t ewant to. You still get to exclude that first 500,000
of gain (250,000 for filing single or HoH.)

- quote -

I need prompting on the three year period you refer to.

- quote -

Not really.

- quote -

If the home was used for business or rental and not for your
personal use, and you exchange the home for another, you
might be able to postpone gain by exchanging the property.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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nospam[at]nothere.com says...

- quote -


1) Yes

2) Not a 3-year period. You have to have lived in the home
as your primary residence for 2 out of the previous 5 years.

3) If you don't really qualify.

4) There is no provision for "gain postponement" anymore.

Gary

--
You can probably X figure out X which letters to X delete to
derive my email address X.

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I'm a little unclear regarding exclusion allowable for gain
on sales of main home, and hoping you can help me answer
some of the questions below.

My parents are in the process of selling their main home,
and they would be qualified to exclude their gain up to
$250K each for the sales based on the ownership and use
tests. However, they will not buying another home.

1) Will they still be eligible to exclude the gain with no
plan of buying a different home to live in?

2) What is the 3 years period regarding whether to exclude
your gain or not?

3) Once you claimed the exclusion, is there any reason you
would be required to pay taxes on that gain at a later time?

4) What is the different between this exclusion vs. gain
postponement?

Thank you very much for all your help.

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