09 Dec If I rent after I sell my home, do I have to pay taxes on the profit?

Q. If I sell my primary residence for a profit of less than $250,000, do I have to pay taxes on the profit if I do not buy another home but rent instead? I have heard about the $250,000 exemption.
— Seller

A. Whether or not you pay taxes on a home sale has nothing to do with whether you rent or buy another home.

“If you are not married you receive an exclusion up to $250,000 if you own and occupy the property as a principal residence for two of the five years immediately before the sale,” said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.

If you’re married, you may be eligible for a $500,000 exclusion, he said.

You do not have to buy another home to have the exemption, Bagner said.

Note that you can claim an exclusion once every two years so this isn’t a one-time exception.

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This story was originally published on Dec. 9, 2020.

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