When you sale a house and want to buy a house in a U.S territory or another state does option 1031 exchange apply or you got to pay taxes for that sale

@ashleylazarian

2 ай бұрын

It depends on if that house is your primary residence. Let's say you are selling the home that you and your family personally live in right now and you are selling that home to buy another home that you plan to live in. That is not considered a 1031 exchange, nor would you pay capital gains tax on that property. Now let's say you have an investment property that you have been renting out. You want to sell that investement property, take the money you make from that property and buy another property to have as a rental. That would be considered a 1031 exchange. As long as you buy a property within 45 days of selling the first one, you would not pay capital gains tax.

I have always been confused on this Capital Gains stuff. Our plan is to sell our primary residence in Pennsylvania, then move to North Atlanta; either moving into a short-term rental apartment or even living with our kids short-term, WHILE we look for our new home. If we luck into finding what we want immediately, then it will be a move from old house to new house. Does the 45 day window apply to our situation or is this just for investment properties? Would we pay any capital gains, since this is our primary resident and not an investment? Second part of this... We built our current home 35 years ago. I don't even know if I still have records of what we spent to acquire the lot and what I paid the contractor to build the original house. Then in 2008, we added an $80,000 addition. Our house is only worth about $380,000, according to that Zillow Z-estimate, so we would be safely under the $500,000, but I wonder if the IRS would require those original costs for lot, build, addition.

@ashleylazarian

2 ай бұрын

You aren't alone. It can be very confusing! This would not apply to your situation if you are selling your primary residence. Let's say you then moved into a short term rental so you took your proceeds to the bank until you found the right home. You would not pay capital gains tax on your proceeds. Please know the zestimate is just an estimate of what Zillow thinks your home is worth. Sometimess they are pretty close and sometimes they are far off. I would have a Realtor that is very familiar with the area give you an accurate CMA so you have a better idea of what you can list the home for and the proceeds you would be walking away with. Email or call me if you want to dive deeper- I'm. happy to talk it through with you. This is a big move for you.

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