Capitol Gain Taxes On 2nd Home
I bought a home over 30 years ago in Ct for 37,000.. I retired and bought another home in SC. 7 years ago. I just sold my Ct home for 245,000. I never rented the home in CT because we go back and fourth a lot. How much Capitol Gain must I pay and if i buy a condo in Ct can I use the proceeds from the sale and put it towards the condo. That would get me some relief. Thanks
If you lived in the home for the past 2 out of 5 years you can claim $250,000 capital gains exlusion ($500,000 if married). The IRS allows for temporary absenses and a temporary absense is defined as anything under 1 year. Since you did not rent the property out and likely visited it several times per year, you should be able to qualify for an exclusion.
Make sure to talk to your accountant about this. I am not a professional.
Unfortunately, you are about four years too late to do any effective tax planning.
For the past seven years you have been living in your SC house as your primary residence, while the CT house was used as a second/vacation home.
Because your CT home is not your primary residence and over three years have passed since you moved, you are no longer eligible for the Section 121 capital gains exclusion on the sale of your primary residence.
Your CT home sale is a taxable event. The residence rollover replacement rules in the tax code were rescinded in 1997, so using the sale proceeds to buy something else will not give you any tax relief.
The capital gains tax rate on your sale profits will only be 15% if you are in the 25% tax bracket or higher, but only 5% if your marginal tax bracket is 15% or lower. You are free to invest your after tax proceeds any way you wish.
Consult a licensed tax professional in your area for specific details.