Capital gains tax?

Owned and occupied home for 14 months. Gained 50k in equity through remodel. Can we sell and use the gained income + savings to purchase new home and avoid that capital gains tax? The language online is confusing to me. Our next purchase wouldn't be a remodel, rather our long term residence.
I don't think you can. The IRS is looking to give a break to homeowners and not property flippers. Hence the 2 year rule. Makes sense if you think about it.
Originally Posted By: dparm
So keep it for 10 more months, problem solved.
Yup, 2 year minimum. Maybe use the additional 10 months to do some more improvements?
Appleton, WI
The home has to be your primary residence for 2 out of the past 5 years to qualify you for the capital gains deferral. If you just own it but move to another house for the last 10 months of the 2 year period, you don't meet the qualification. Dan was right about the $250k single and $500k married ceiling on the gain for capital gains purposes. It doesn't matter what you've done to the house in the two years, as long as the resulting gain is less than the two limits. You could conceivably buy another house and move into it for the next two years and then move back into this house for another 10 months and then sell them both and none of the gain on either of them would be subject to the capital gains tax. As it stands now, the house is just an asset that would qualify for long-term capital gains consideration because you've owned it more than 12 months. That would be a max tax rate of 15% and if your other income is below a certain amount it may even be 0% now with the new legislation.
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