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Avoiding Capital Gains Tax

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  • 04-12-2010, 10:35 AM
    WilmingtonProper
    Avoiding Capital Gains Tax
    My question involves real estate located in the State of: NC

    I was looking for a few opinions on this one. it is my understanding that after you live in a home for 2 years, it can be sold and profits will not be subject to capital gains taxes. but how do the rules apply if someone has multiple properties?

    scenario:

    i have two homes. one is currently on the market and i lived in it from 2000-2008. will i be taxed on the sale of this home since it is no longer my primary residence?

    i have been in my current home for a year and a half. If i sell it next year will i be taxed?
  • 04-13-2010, 09:41 PM
    Mr. Knowitall
    Re: Avoiding Capital Gains Tax
    Read this.
    Quote:

    Quoting If You Have More Than One Home
    If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

  • 04-13-2010, 10:10 PM
    SChinFChin
    Re: Avoiding Capital Gains Tax
    Quote:

    Quoting WilmingtonProper
    View Post
    My question involves real estate located in the State of: NC

    I was looking for a few opinions on this one. it is my understanding that after you live in a home for 2 years, it can be sold and profits will not be subject to capital gains taxes. but how do the rules apply if someone has multiple properties?

    scenario:

    i have two homes. one is currently on the market and i lived in it from 2000-2008. will i be taxed on the sale of this home since it is no longer my primary residence?

    i have been in my current home for a year and a half. If i sell it next year will i be taxed?

    If you lived in your last home for "2 of the last 5 years", you can claim the exemption of capital gains, $250K for individual, or $500K for husband and wife. In you lived in your last home for at least 2 years from 2000 to 2008 you should be exempt.

    Now if you lived in the current home for at least two years at the time you sell it, and you did not sell another home within 2 years, then, the exemption also applies.

    See IRS publication:

    http://www.irs.gov/publications/p523...link1000200713

    So if you sell your last home this year, wait another two years before selling your current home. As there are major tax consequences, double check with your local tax professional as to "state tax laws" that may also apply.
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