“Hi Gary. After I sell my home, how long do I have to buy another one to avoid paying taxes?”
Answer:
You’re either thinking of the old I.R.S. Code Sec.121 rules for a principal residence, or the Sec.1031 rules for investment property.
Old Section 121 rules gave you 18 months to sell your home and reinvest in another home.
Current 1031 rules give you 45 days to identify a property and, running at the same time, 180 days to close.
Neither of these rules applies to you selling your home today.
Current Section 121 rules do NOT require you to purchase another home at all. Individual owners who’ve lived in and owned their home for at least 2 of the past 5 years can exclude $250,000 of gain. Couples can exclude $500,000.
Note: There are exceptions to the 2-year rule. If you want to know more about that, call me. And of course you should consult your tax expert.
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