Alain, Home Buyer in

To avoid short-term capital gains, does my next home purchase need to be at the price of my current selling price?

Asked by Alain, Sun Sep 15, 2013

I purchased my first home in 12/12 for $174 and am now selling it for $220. I've been told that in order to avoid short-term capital gains, I must purchase a home for $220 within the next 12-months. Is this true?

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12
Michelle Car…, Agent, Coppertino, AL
Sun Sep 15, 2013
Here is a link to the IRS publication on Selling Your Home. http://www.irs.gov/pub/irs-pdf/p523.pdf
Capital gains laws have changed many times over the years. It used to be you had to buy up to defer your capital gains. Check with a tax professional to assess your actual tax liability in this case.
1 vote
Alain, Home Buyer,
Sun Sep 15, 2013
Neither of those two articles talks about reinvesting. I need to know how expensive my next home needs to be to avoid short-term capital gains...
1 vote
Alain, Home Buyer,
Mon Sep 16, 2013
Correct. An exchange is the only way of avoiding capital gains tax BUT only if my home was purchased as an investment property. Trying to determine that now with my broker. If so, I need to purchase my next home at equal value.
0 votes
Mike Gonzalez, Agent, The Colony, TX
Mon Sep 16, 2013
Consult a qualified CPA, however it sounds like you're talking about a "1031 exchange". The web reference below should assist you in answering your basic questions but you really do need to discuss specifics with a CPA or other qualified financial advisor before proceeding any further with the sale of your home.

Best wishes!

Mike Gonzalez
SFR-Certified Realtor / Broker / Texas Notary Public
214-783-4240 | Mike@MosaicDFW.com
Mosaic Realty, Residential REALTORS®
0 votes
Chris Mortim…, Home Buyer, Frisco, TX
Mon Sep 16, 2013
Of course the disclaimer says, I am just a Realtor, and not a Tax Advisor, so please consult a CPA.

From my understanding, the Tax relief act of 1997 granted the right for there not to be taxes on your primary residence as long as profits don't exceed $250,000 for an individual, and $500,000 for a married couple. This is "is most cases", and there are exceptions. This must be primary residence, and does not apply to investment properties. If you plan on selling a rental property, the rule is you must live in the house 2 of the last 5 years before the property is sold.

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Chris Mortimer
Realtor #0594252
Champions Real Estate
(214)546-5101
0 votes
Susie Kay, Agent, Dallas, TX
Mon Sep 16, 2013
I would suggest talking to a CPA or real estate attorney. As realtors we are not licensed to give advice on taxes or law. Let me know if you need some contacts.

Susie Kay, Realtor®
GRI, CHMS, SFR
Residential/Commercial/Investment
English-Indonesian-Hokkien
------------------------------------------------------------------
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240
469-371-2899
susie_k@att.net

http://www.dfwdreamhomes.net

Servicing your real estate need is my priority!
0 votes
Nick Walton, Agent, Frisco, TX
Mon Sep 16, 2013
Unfortunately I don't feel qualified to answer that question. If you need a recommendation for a tax professional let me know.

Nick Walton, Realtor®, GRI, e-PRO
Mi Casa Es Su Casa International Properties
Global Reach - Local Knowledge
Cell / Txt: 469-556-2393
0 votes
Alain, Home Buyer,
Sun Sep 15, 2013
$37,645 net but my realtor said I now have to buy a home of $220+ within the next 12-mo to avoid short term capital gains. Is that true? Note, I did use this property as a home office and invested $12k in upgrades/repairs, prior to moving in.
0 votes
Dallas Texas, Agent, Dallas, TN
Sun Sep 15, 2013
PS do you know what your net amount is on sale of your property AND any Realtor provide you those totals ? You have approx. $50K gross profit HOWEVER not your net profit

My website is updated daily therefore saves you time search accurate information

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Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
972-699-9111
http://www.lynn911.com 100's of Dallas homes listed for sale or lease

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0 votes
Dallas Texas, Agent, Dallas, TN
Sun Sep 15, 2013
Recommend to confer with your CPA who can answer all your questions. This is against professional code of ethics for NOT a professional field we practice in .

My website is updated daily therefore saves you time search accurate information

Contact my office today where I can show you many amazing homes work with your family specifications.
_________________________________________
Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
972-699-9111
http://www.lynn911.com 100's of Dallas homes listed for sale or lease

Follow me on Facebook and Twitter
http://www.facebook.com/lynn911dallas
https://twitter.com/Lynn911

(If my answer is helpful indicate by THUMBS UP or BEST ANSWER. Thank you )
0 votes
Amanda Wao, Agent, Brashear, TX
Sun Sep 15, 2013
I hope these pages will help...the length of time you owned the home you are selling is coming into play as well as the profit made.

http://taxes.about.com/od/taxplanning/qt/home_sale_tax.htm

http://www.nolo.com/legal-encyclopedia/avoid-capital-gains-t…
0 votes
I think though that if your reasoning for moving was a sound one, you could possibly claim a partial exclusion ( and no, you would not have to purchase an evenly priced home to avoid that tax in that situation, but you would definitely have to consult a tax advisor in this situation)
Flag Sun Sep 15, 2013
Michelle Car…, Agent, Coppertino, AL
Sun Sep 15, 2013
You need to speak with a tax expert familiar with your finances about this situation. If you had bought it and lived in it for at least 2 years out of the past 5 years, you could keep up to $250K in profit tax-free as a single-person.
0 votes
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