We live in another country and want to sell our house in the US. As we won’t be rolling the profits into another house right away, will we be socked with big taxes on it? Any way to avoid this?
Was the house used strictly as a residence or is it rental property? Property used as a residence is pretty much exempt from capital gains tax regardless of whether you purchase a new one. However, if it can be considered rental property then it gets much more complicated. It would probably be a good idea to consult an accountant.
You would still have to report the sale on your tax return.
IANAL, so first, talk to a good real estate attorney as well as a tax lawyer.
The capital gains law was changed in the mid 90’s and basically it states that if you lived in the house 2 out of the last 5 years a single person doesn’t have to pay tax on the first 125k profit, a couple (married or otherwise I believe) is 250k profit. This is regardless if you roll it into another property or not.
Let me tell you, that law helped my wife and I sell a large house we had, pocket a huge profit, and move into a smaller investment property we had. We had 2 lawyers though. You should have at least that many. Good luck!
Not so Pelleas. Only the first 250k for a couple. If they have a house that brings in more than that worth of profit (not hard to do now days) there may be a tax consequence.
The change in the law helped open up real estate in the mid 90’s.
A lot of older people who bought their house many years ago were afraid to sell due to capital gains. The “one time exemption” has been eliminated.
You’re right pkbites. I had intended to mention the upper limit but overlooked it. However, I was thinking it was higher than $250,000. Glad you cleared that up.