Subject:  Capital Gain issue
From:  Mario
Date:  Fri, 17 Jan 2003

Hi,

I was wondering about a situation that I'm going through at the moment. I have a 1 bedroom/1 bath condo and I'm selling it. I was told by a real estate lawyer that if I sell and do not exceed the $250,000 profit mark, that I would not have to pay any capital gain tax on it. I plan on making about $30,000, and will not be there 2 years until June of this year. I was told that I would have to stay in my primary residence for 2 years, without paying capital gain tax. Is this correct?

Mario

Answer

Date:  5 Feb 2003

Hello Mario,

That is the general rule. The IRS has just issued guideline for exceptions to the rule where you can qualify to use a portion of the exclusion, such as if you have to sell the house because of a health-related issue or because you need to move because of a change of employment. If you don't have any "extenuating circumstances" and want to avoid paying tax on the gain, wait until you meet the two-year residency requirement before selling the residence.

Good luck!
Mike Gray

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