Question

We bought a NJ home in 2023 with another couple. If we sell within 2 years, will we owe capital gains tax? Can buying another property help avoid it? What about a buyout?

Forum|Forum|1 year ago
June 27, 2024
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We bought a home in NJ in 2023 with another couple as our primary residence. If we sell within the first two years, will we owe capital gains tax? Are there ways to avoid it, such as buying another property with the profit? Alternatively, if one couple buys out the other, will there be capital gains tax?

TurboTax Online

O

Opus 17

Employee

If you sell for more than you paid (regardless of whether you sell your share to the other owners or to a third party) then you have a capital gain.

If you sell for one of the reasons listed in publication 523 on page 6, you may qualify to exclude part of your gain. If not, the gain is fully taxable.

https://www.irs.gov/pub/irs-pdf/p523.pdf

Also, if you sell in less than a year, then any gain that is taxable will be taxed as ordinary income. If you sell after 1 year, any gain that is taxable will be taxed at the lower long term capital gains rate.

X

xmasbaby0

Employee

Buying another property would be irrelevant. Before 1997 people could avoid capital gains if they purchased another house of equal or higher value with the gain from the sale of their home. That law changed many years ago. Buy another property if you want to, but do not expect to avoid tax by doing so.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**