Can I offset a large capital gain on sale of a house with a capital loss in the stock market?

Forum|Forum|3 years ago
July 6, 2022
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I sold a house in 2021. Capital gains taxes (not just gains) will be almost $500,000. If I have capital losses of a similar magniture in the same year would that negate my taxes?

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Anonymous_

Employee

You can use your losses from stock market transactions to offset the gain on the sale of your house (provided you are not in the business of flipping houses).

This may not help much if the actual tax on the gain from the sale of your house is $500,000, but you can take advantage of the Section 121 exclusion if you owned and used the house as your primary home for the last two out of five years leading up to the sale.

See https://www.irs.gov/taxtopics/tc701

rhodionAuthor

No, not a flipper. It was our primary residence and so we can claim the exclusion, but I will still owe the 500K even after that! Let me break it down into two sub questions:

1. Do the gain and loss have to be of the same type to offset each other? long term versus short term or property versus stocks?

2. Does each S100 of loss cancel $100 of gain so that the loss actually saves me $25 if the tax rate is 25%?