Capitol Gains
We own a home and vacant land in Florida. We are buying land in Colorado. We know that if we sell the our Fl land to buy new property for building in Colorado that is does not qualify for 1031 as we intend to build on it and thus have to pay cap gains. The question is, if we take a mortgage to build a second home that is to be our retirement home and then 2-3 years later sell our current home and invest that money towards payoff of the new mortgage, is the money subject to capitol gains since the sale and purchase to not take place at the same time? Is there any IRS language avail on this subject. I have looked but not found exactly the answer I need for my situation. Thank you.
When you sell your primary residence, your sale profit up to $250K per taxpayer is tax free provided you have both owned your home for two of the five year prior to the sale, and you occupied your home as your primary residence two of the five years prior to the sale.
You are free to do anything you wish with your tax free sale profits. There is no need to reinvest the proceeds into another primary residence to preserve the tax free character of your sale profit.
Sale profit that exceeds your maximum $250K capital gains exclusion per taxpayer is subject to capital gains taxes regardless of what you do with the money afterward.
I am not newkid but the answer is you can do it as often as you like as long as it is your primary residence you can sell it after living in it two years for 250000 capitol gains or twice that if married and was residence (primary) of both!!!.