Q:

I was viewing your website and got your email address.  You seem to know what your talking about, so I have a question for you that I have not been able to get a clear answer on.  My husband and I sold our first home, which we used as a rental for a while, in September of 2003.  We did not pay any gains because we had lived in it two of the previous five years.  Well, we are now planning on moving.  We have lived in our current house for over five years, but, if we sell before September of 2005 will we have to pay a gain because the sale of our rental was less than two years ago?  Does it make a difference if we are rolling any income from the sale into the new home we are having built?  Please let me know if you know anything about this sort of thing.

A:

As I've explained on my website, buying or building a new home has been entirely irrelevant to the calculation of taxable gain since May of 1997. 


You failed to mention why you are going to be moving before September 2005.  If it's just your own choice, a sale before the two year anniversary of your previous home's sale will be fully taxable.

However, if the sale is happening so soon due to health, employment or other unforeseen circumstances, you would be able to get around the once in two year limit.

You should discuss your circumstances with a professional tax advisor who has experience applying this rule.

Good luck.

Kerry Kerstetter

 

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 6/18/2005 02:23:00 PM Send this post: