The rules connected to the capital-gains exclusion with home sales are complicated.
Dear Tax Guy, ... Greeting, readers. I’m Andrew Keshner and I’m the tax reporter for MarketWatch. I write about the controversies, open questions and best strategies about taxes. For the purposes of this new column, that also makes me the ‘Tax Guy.’
As to buying and selling: You hope to pocket the profit, minimize your tax liability, and keep all your memories. The order of the purchase and sale does not matter for tax purposes. You do not have to rush into buying another house. Tax exemptions The first $250,000 in profit is excluded from capital gains tax for individuals and married couples filing separately, according to IRS rules. The capital-gains exclusion rises to $500,000 for a married couple filing jointly.
“The only purchase that matters is the purchase of the home you are selling,” he added. In other words, you don’t worry about any sort of reinvestment requirement, but you do need to be aware of other eligibility rules for capital-gains exclusion.
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