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Not The Old-Fashioned Way |
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Dear Edith Lank: Can't it still be done the old-fashioned way? Can I sell two vacation homes and buy another home, not a vacation home, but one I will be living in permanently? Will I owe taxes on the two old homes if the new one costs more than both together? How long after the sales must I buy the new home? I also will be selling another house I have lived in permanently for the last five years |
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Sorry, but the old-fashioned tax break is no longer in effect, and it doesn't matter whether you buy a replacement home or not. Besides, the homesellers tax break was always intended only for your main residence. It sounds as if the sale of your "permanent" house will qualify for up to $250,000 in profit free of federal capital gains tax (twice that if you're married filing jointly) . As for the vacation houses, no special tax break will apply to the sale. If they are rental properties, better consult a tax professional for advice about any capital gains tax due as it can be a bit complicated. If they are just houses you used yourself and you've owned them more than a year, you will owe long-term capital gains tax, no more than 15 percent on your federal return plus a lesser amount for state tax |
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Edith
Originally published on January 22, 2005 |
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