I’m thinking of selling my house and moving to a lower cost of living area. How much capital gains tax will I pay on the house sale?
Let’s use round numbers. Let’s say I bought the house for $100,000 and I sell it for $500,000. I have a profit of $400,000. I believe that if I buy a house for $500,000 or more I don’t pay capital gains. But what if I buy a house for $400,000, the amount of the profit? Do I pay on that transaction?
Also, I believe I can buy more than one property to avoid the tax. Is that right?
Finally, do I have to pay state taxes also?
Let’s not consider things like the one time exclusion for home sale.
You’re out of date on the details of capital gains on home sales; much of what you’ve stated refers to old tax law that no longer applies.
First off, there is no “one-time exclusion” anymore, nor is there any restrictions on the cost of the new house you buy. If you’ve lived in the house as a primary residence for more than two years, you can deduct up to $250K of the profit from the sale. If you’re married, it goes to $500K.
I dunno about state tax, or about buying more than one property. I’m also not a CPA, so don’t put too much trust in what I say. Go talk to your accountant.