Question: We plan to sell our home next month. This will be our 2nd sale in 3 years. We deferred paying capital gains tax on the 1st one because we bought a more expensive home. Can we do the same thing again?
Answer: You can use the residence replacement rule to defer your profit tax as many times as you wish. To qualify, both the old and replacement home must be your principal residences. You must occupy the replacement home within two years before or after selling your old home, and the replacement home must equal or exceed the old home’s sales price. Home ownership continues to be a great tax shelter.
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