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From:  Pamela
Date:  Tue, 11 Jul 2006

We are in the process of selling our home. We have owned the home since 1995 and plan on moving to Kentucky from Florida. What capital gains tax will we have to pay for the sale of our home and will we have to pay them if we reinvest the proceeds in a new home?

Answer

Date:  09 Aug 2006

Hello Pamela,

See our article, "Could your residence be the ultimate tax shelter?"

You should qualify for the exclusion of gain from the sale of a principal residence, $250,000 for an individual or $500,000 for married, joint. The maximum federal tax rate for long-term capital gains is currently 15%. If you sell the home while you are still Florida residents, before you move, there should be no income tax. Buying a replacement residence no longer qualifies for a tax deferral on the sale of a residence.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

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