Can I avoid tax on my home sale by buying a new one?

October 8, 2004

Subject:  Avoid paying capital gain?
Date:  Mon, 20 Sep 2004
From:  Lucia

Hi Mike,

My husband and I bought a home in Palmdale, CA on June, 2003. We want to sell the house now and buy a new home. We were told we could avoid the tax if we bought the replacement residence within a certain time frame. Is that right?

Thank you,



Date:  Fri, 08 Oct 2004

Hello Lucia,

Your friend is thinking about an old tax law that has been repealed and replaced with the new "more than two years holding period" rule. If you sell your home with the facts you gave me, any gain will be taxed as a long-term capital gain. Remember California taxes long-term capital gains at the same rates as other income and will require income tax withholding for the sale of 3 1/3% of the sales price.

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.

Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+
Our Blog
© 2018

Subscribe to Michael Gray, CPA's
Tax & Business Insight

We respect your email privacy