Can I avoid paying capital gains on my home sale?
Q. Do you escape capital gains tax if you immediately put the money from the sale in another home?
A. No one wants to pay tax on the sale of a house.
Depending on the specifics of your situation, you may not have to pay anything at all.
Assuming you ask questions about the sale of a personal residence, if you meet certain conditions, you could exclude the first $ 250,000 if you are single, or $ 500,000 if you are married, jointly declaring the sale, a Michael said. Maye, Certified Financial Planner and Certified Public Accountant at MJM Financial in Gillette.
To qualify for the capital gains exclusion, an owner must pass both the ownership test and the use test, Maye said.
“The requirement is that you have used the house as your primary residence in total for two of the five years before the house was sold,” he said. “Also, as a general rule, you cannot rule out the gain if you have already excluded the gain from the sale of another home in the two-year period prior to the sale of your home. “
See IRS Publication 523, Selling Your Home, for more details.
If you’re talking about investment or commercial property, another section of the tax code, section 1031, is potentially available to defer capital gains tax if the rules are followed, Maye said.
He recommends that you seek advice from a qualified tax professional, such as a chartered accountant, who can apply the rules depending on your specific situation and circumstances.
A good place to start is the New Jersey Society of Certified Public Accountants “Find a CPA” tool.
Email your questions to [email protected].
Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly electronic newsletter.