Someone once told me that if a person sold their first house and turned the profit over into another house within one year, they wouldn’t have to pay taxes on the profit.
Now, I don’t even know if this is true so that’s my first question.
Assuming this is true:
Is the deadline actually 1 year?
Does the WHOLE profit or just a percentage have to be used in the new purchase?
Does a residential land purchase count or does the land actually have to have a house on it?
Thanks!
The current tax law is that you can sell your principal residence once every two years and exclude up to $250,000 of profit, or $500,000 of profit for a married couple without investing any of the money in anything. Check this Motley Fool link for details.
I think that you may be thinking of a 1031 Exhange , which is a tax-deferred exhange.
Actually, I think he’s thinking of what the tax law was prior to the current version, which Bill Door describes. Not sure if the rollover into a new residence had to be within one year or two years though.
I’m so glad you posted that link Bill Door. I think I’ve finally convinced my fiancee that we’d be better off if we sold this place now before they condo association raises the fees again.