10 Nov Can I get out of paying capital gains on my home sale?
Q. Do you get out of capital gains tax if you immediately put the money from the sale into another house?
A. No one wants to pay tax on a home sale.
Depending on the specifics of your situation, you may not have to pay anything at all.
Assuming you’re asking about the sale of a personal residence, if you meet certain requirements, you would be able to exclude the first $250,000 if you’re single, or $500,000 if you’re married filing jointly, on the sale, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.
To qualify for the capital gain exclusion, a homeowner must meet both the ownership test and use test, Maye said.
“The requirement is that you used the home as your primary residence in aggregate for two out of the five years prior to the home’s sale,” he said. “Also, generally, you can not exclude the gain if you already excluded the gain from the sale of another home during the two-year period prior to the sale of
See IRS Publication 523, Selling Your Home, for the nitty gritty details.
If you’re talking about an investment or commercial property, another section of the tax code, Section 1031, is potentially available to defer capital gains tax if the rules are followed, Maye said.
He recommends you seek tax advice from a qualified tax professional such as a certified public accountant who can apply the rules based on your specific situation and circumstances.
A good place to start is the New Jersey Society of Certified Public Accountants’ “Find a CPA” tool.
Email your questions to .
This story was originally published on Nov. 10, 2021.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.