Agent

Avoiding tax on second-home sale clarified

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

DEAR BOB: I want to sell my second or vacation home and avoid the profit tax. I was told if I sell and reinvest the profits in another home I could avoid the tax. But I have considered moving into my second or vacation home to establish it as my primary home so I can avoid the tax. Another friend told me I have to live there three years to qualify. Is that true? --Donald P. DEAR DONALD: You've been hanging out with a "bad crowd." They are giving you incorrect information. Purchase Bob Bruss reports online. To qualify as your principal residence, you must own and occupy the home as your primary residence at least 24 of the last 60 months before its sale. Then you can qualify for up to $250,000 tax-free principal-residence-sale profits, thanks to Internal Revenue Code 121. A qualified married couple filing a joint tax return in the year of the sale can claim up to $500,000 tax-free capital gains. Buying a replacement residence has no effect on your IRC 121 benefits. Full details are...