The obvious ramification would be a stepped up basis in the new home being purchased instead of a potential deferred gain that may someday be exempt. I guess that might be the source of this question, no gain to defer or the seller is underwater in the present property????
My tax code guru always said to look at the entire picture and then look at each section/transaction. That would certainly be correct advice with this subject. One size does not fill all when it comes to taxation.
On a similar topic, there are some strings attached when it comes time to arrange financing on the new property if the existing property is retained as a rental. Donâ€™t assume a rent payment equal to the current house payment wipes out the debt for mortgage qualification purposes on the next home. Thatâ€™s not how it works. I bump in to this a lot, had one last week.
NMLS # 6395
Financing Kentucky One Home at a Time