Subject: Tax on buying new home and then selling my home within 2 years!
Date: Tue, 22 Mar 2005
Dear Mr. Gray,
I sold a home for $330,000 and bought another home for $520,000 shortly before the sale. My CPA says I have to pay capital gains tax on the sale, because I didn't own the first home for more than two years. Is that right?
Thank you for your time!!
Date: Fri, 01 Apr 2005
Probably. The old rules allowing the deferral of gain from the sale of a principal residence when it is replaced with a more expensive residence were repealed back in 1997. We have an article on our web site that explains the new rules at www.realestateinvestingtax.com/residence.shtml.
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