When selling a house, how much time do I have to use the proceeds to purchase another house before it’s considered capital gains? I have heard both 60 and 90 days. Thanks.
You’re reading an old tax code!
Are you talking about tge sale of a private residence or the sale of an inestment property?
Keith
Try researching a 1031 Exchange for taking proceeds and reinvesting it with out being taxed on the proceeds from the previous sale.
I believe the turn around time is 180 days.
Tony
But you only have 45 days to make the arrangements! It’s kinda complicated…that’s why I asked if it was the sale of a private residence or an REI property.
Keith
Both. I’m interested for my own personal residence and also investment properties. So if for personal, let’s say my current balance is $300,000. I sell this house for $600,000 and buy another house for $700,000. So I use the $300,000 as a down payment, there is no tax? How many times can I do this?
<<Both. I’m interested for my own personal residence and also investment properties. So if for personal, let’s say my current balance is $300,000. I sell this house for $600,000 and buy another house for $700,000. So I use the $300,000 as a down payment, there is no tax? How many times can I do this?>>
That is from the old tax code…this does not exist any longer! Actually, in most cases, the new tax code is better…if you own the property and it has been your primary residence for at least 2 out of the last 5 years, you can exclude $250,000 in capital gains ($500,000 for a married couple).
So in your example, if you and your wife have owned and lived in the property for 2 out of the last 5 years, your $300,000 (plus or minus because you didn’t tell us what you paid or what capital improvements you’ve made) is ALL tax free. You can put it in the bank and start all over again…or you can buy a house and use some/all of it for a downpayment…
You can do this as often as every two years…
http://www.irs.gov/faqs/faq-kw113.html
Keith