TBrase Posted February 15, 2015 Report Share Posted February 15, 2015 Bought a 5th wheel and now onto the next issue... selling our house. My wife is concerned that if we sell our house, the IRS expects us to buy a replacement in 3 years. If we don't, there may be tax consequences. Any of you full timers that have sold a house experienced this? Link to comment Share on other sites More sharing options...
mrfrank Posted February 15, 2015 Report Share Posted February 15, 2015 No. Not 7+ years ago. Might depend on how much gain you get when you sell the house. Sure won't matter if you take a loss. Link to comment Share on other sites More sharing options...
Big Greg Posted February 15, 2015 Report Share Posted February 15, 2015 That law has changed unless you get a few million for your house sale. Greg Link to comment Share on other sites More sharing options...
JRP Posted February 15, 2015 Report Share Posted February 15, 2015 "My wife is concerned that if we sell our house, the IRS expects us to buy a replacement in 3 years. If we don't, there may be tax consequences." That all changed in the tax reform act of 1997. You are no longer required to purchase a replacement house, you are no longer limited to once in a lifetime home sale exemption. In fact there is no requirement or limitation on what you do with the proceeds, and you can repeat the home sale tax emption as many times as you qualify. The gain from the sale of your primary home are tax exempt, up to $500,000 (married)/$250,000(single), provided: you own the home and it was your primary residence for at least 2 of the last 5 yrs, and you haven't already used the primary home sale exemption within the last 2 yrs. read IRS Publication 523 Link to comment Share on other sites More sharing options...
TBrase Posted February 15, 2015 Author Report Share Posted February 15, 2015 Thanks All; that's what we needed to know. Will find that IRS 523 also! Link to comment Share on other sites More sharing options...
richfaa Posted February 15, 2015 Report Share Posted February 15, 2015 Read capitol gains. Link to comment Share on other sites More sharing options...
Kirk W Posted February 15, 2015 Report Share Posted February 15, 2015 Thanks All; that's what we needed to know. Will find that IRS 523 also! You can download a free copy of the publication #523 from the IRS website, via this link. Link to comment Share on other sites More sharing options...
Mainuh Posted February 15, 2015 Report Share Posted February 15, 2015 Wow! We moved here in 94 and got hammered during a downsize. I still remember writing a very paoinful check that year. Hadn't looked into how much we'd have to pay selling this one next year, so this is awesome news for us! Thanks to the OP and the replies. This is great news! Link to comment Share on other sites More sharing options...
Barbaraok Posted February 15, 2015 Report Share Posted February 15, 2015 That's what happens when you stay in one place for a long time, you don't keep up with all the tax loopholes as you do when you are moving every 5 yrs or so. Barb Link to comment Share on other sites More sharing options...
Gypsy Traveler Posted February 15, 2015 Report Share Posted February 15, 2015 We are facing the same scenario. We sold our house yesterday. We bought the 5th wheel last month. Our tax man told me to save all receipts we used for upgrades to the house. We will write that off against the very small profit. We'll be lucky to break even. He also wants to use the sales tax on our 5th wheel. We'll register to domicile in South Dakota. That might help State taxes but not the Feds. Good luck. Link to comment Share on other sites More sharing options...
Scion Gypsy Posted February 16, 2015 Report Share Posted February 16, 2015 Ugh, isn't the one time sale exemption something you are only eligible for after age 55 (?) and it has to be your primary residence and you had to live in it for at least the last 2 years prior to the date of sale? Link to comment Share on other sites More sharing options...
Kirk W Posted February 16, 2015 Report Share Posted February 16, 2015 Ugh, isn't the one time sale exemption something you are only eligible for after age 55 (?) and it has to be your primary residence and you had to live in it for at least the last 2 years prior to the date of sale? From IRS publication 523........... The age limit was removed some time ago. How your sale qualifies. Your sale qualifies for exclu- sion of $250,000 gain ($500,000 if married filing jointly) if the following is true: You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale. You did not acquire the home through a like-kind ex- change (also known as a 1031 exchange), during the past 5 years. You did not claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude. Link to comment Share on other sites More sharing options...
Chad Heiser Posted February 16, 2015 Report Share Posted February 16, 2015 I am only 43 years old. I'm have sold three houses so far in my life, all of which were my primary residences for at least two years. I have never had to pay capital gains on any of those sales. Link to comment Share on other sites More sharing options...
Scion Gypsy Posted February 16, 2015 Report Share Posted February 16, 2015 I am only 43 years old. I'm have sold three houses so far in my life, all of which were my primary residences for at least two years. I have never had to pay capital gains on any of those sales. Were you rolling over the gain from the sold house into a new house that you bought? This is where the 2 year rule also applied--you had to own the home for 2 years and you had to buy another with in 2 years of the sale date. Link to comment Share on other sites More sharing options...
Scion Gypsy Posted February 16, 2015 Report Share Posted February 16, 2015 Kirk, are you saying there is no longer an age restriction on the one time capital gains exclusion? Link to comment Share on other sites More sharing options...
Barbaraok Posted February 16, 2015 Report Share Posted February 16, 2015 Kirk, are you saying there is no longer an age restriction on the one time capital gains exclusion? Yes, that is what he is saying. He even gave a link to the IRS on this very subject in message #7. Really people, times change and that is one of the reasons that using a program like Turbo Tax is a good idea if you haven't dealt with selling a house or receiving capital gains in a few years. Let the program walk you through the process and don't think that what you did 20 years ago is still applicable. Barb Link to comment Share on other sites More sharing options...
LindaH Posted February 16, 2015 Report Share Posted February 16, 2015 Were you rolling over the gain from the sold house into a new house that you bought? This is where the 2 year rule also applied--you had to own the home for 2 years and you had to buy another with in 2 years of the sale date. While you do have to have owned the house for two years out of the last five years (and it has to have been your principal residence), you DO NOT have to purchase another house within two years of the date of sale. Link to comment Share on other sites More sharing options...
Al F Posted February 16, 2015 Report Share Posted February 16, 2015 Were you rolling over the gain from the sold house into a new house that you bought? This is where the 2 year rule also applied--you had to own the home for 2 years and you had to buy another with in 2 years of the sale date. Please download and read the IRS publication Kirk gave the link for. That should answer any questions you may have. Link to comment Share on other sites More sharing options...
s106300 Posted February 16, 2015 Report Share Posted February 16, 2015 We will be putting our house on the market in March. We had similar concerns because we have lived in our house in Southern California for 25 years in an area where real estate values hold and grow well. We will likely sell for 3 times what we paid for the original house. However, during that time we also completely remodeled and refinanced with a sizable mortgage. So, when we sell we will claim all of the remodeling costs (which were substantial) and should come out just fine. Link to comment Share on other sites More sharing options...
Al F Posted February 16, 2015 Report Share Posted February 16, 2015 We will be putting our house on the market in March. We had similar concerns because we have lived in our house in Southern California for 25 years in an area where real estate values hold and grow well. We will likely sell for 3 times what we paid for the original house. However, during that time we also completely remodeled and refinanced with a sizable mortgage. So, when we sell we will claim all of the remodeling costs (which were substantial) and should come out just fine. If your profit is less than $500,000 (for a couple) then you don't have to itemize the remodeling costs. Of course if you were able to buy the house 25 years ago for $100K and now own it free and clear and sell it for say $1.1 mil that is wonderful and well worth the effort to claim the remodeling costs. Link to comment Share on other sites More sharing options...
Scion Gypsy Posted February 17, 2015 Report Share Posted February 17, 2015 Yes, that is what he is saying. He even gave a link to the IRS on this very subject in message #7. Really people, times change and that is one of the reasons that using a program like Turbo Tax is a good idea if you haven't dealt with selling a house or receiving capital gains in a few years. Let the program walk you through the process and don't think that what you did 20 years ago is still applicable. Barb oops, completely missed that one line remark between the two quote blocks--need to wear my cheaters when looking at this forum. Link to comment Share on other sites More sharing options...
Kirk W Posted February 18, 2015 Report Share Posted February 18, 2015 We are facing the same scenario. We sold our house yesterday. ......................That might help State taxes but not the Feds. I think that you need a better informed tax adviser. First of all, South Dakota has no state income tax, but you would be liable for income tax, if any on your property sale in whichever state it is located in. There is no federal income tax liability on it unless the profit is more than $250,000 for a single or $500,000 for a couple. I suggest you need to read IRS publication 523. You can download a free copy of the publication #523 from the IRS website, via this link. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.