CGT on Primary residence

Forum|Forum|3 years ago
May 20, 2022
2 replies
0 views

Hi there! I bought a house in November 2020 and sold it in February 2022. I sold the house because I was able to move in with a friend for much cheaper. I bought the house for 240k and sold for 315k. Net profit was about 43k. I know I will have to pay Short term CGT if I do not purchase a house this year, but when would that deadline be? Would I pay when I file my taxes in 2023? I was not married at the time of sale but recently married, so would I file that as married? Thanks.

Not A Product Question

NCPERSON1

there is no longer a "rollover" of the gain to another primary residence. that rule went out the window many years ago, so there is no 'deadline'

your marriage status on the date of the sale of the home is immaterial ot the filing status you chose on your 2022 tax return..

Depending on your tax situation, you might want to consider making an estimated tax payment for the tax on the profit. OTherwise, there may be an interest penalty when you settle up on April 15, 2023. and it's a long term capital gain (not short term) since you owned it for more than 12 months.

Hal_Al

Employee

November 2020 to February 2022 is more than 1 year, so the gain will be taxed as a long term capital gain, not short term. The two (2) year rule applies to qualifying for the home sale exclusion, not whether the gain is LT or ST.

There are exceptions, for "unforeseen circumstances", to meeting the two year rule, to qualify for a reduced maximum home sale exclusion (just being able to live cheaper would not qualify).

a change in your place of employment
health problems that require you to move, or
circumstances you didn't foresee when you bought the home that force you to sell it. For example, a death in the family, losing your job and qualifying for unemployment, not being able to afford the house anymore because of a change in employment or marital status, a natural disaster that destroys your house, or you or your spouse have twins or another multiple birth.

References:

http://www.nolo.com/legal-encyclopedia/the-partial-home-sale-tax-exclusion-irs-approved-unforeseen-circumstances.html

https://www.law.cornell.edu/uscode/text/26/121

http://www.nolo.com/legal-encyclopedia/qualifying-the-home-sale-exclusion-without-living-in-the-home-two-years.html