From: kamlet@panix.com (Arthur Kamlet)
Newsgroups: misc.taxes misc.invest.real-estate
Subject: Re: Capital gains on home- then what?
Date: 26 Jul 2004 23:54:45 -0400

In article <94d1ed.0407261825.3e869a25@posting.google.com>,
dorite  wrote:
>Hello all,
>I have been reading post on this NG thru google but some of the post
>are a little old so thought maybe someone can give me a fresh answer. 
>Forgive me if this question has been answered many times over... which
>I am sure it has.
>
>Here is my scenario; I own a home in Los Angeles / primary residence.
>In February it will be 2 years so I am gathering info to make a
>decision about selling or not selling. The prices of homes here are
>outrageous and I feel this would be the time to sell if going to.
>However and this may be a huge however- taxes and what to do after; 
>Let's just use the below info for fact, even though by february the
>market can be changed dramtically.
>
>It appears by the home sales in my area the house will sell for around
>$370,000:
>I paid $172,000, 
>
>Capital Gains?  From what I understand, I will not pay capital gains
>if I re invest the profit in a home for $370k or + in 2 years in
>another home.




Sorry, but that rule expired May 7, 1997, and is replaced with
this rule:

If you owned your home and lived in it as your main home for at
least two of the past 5 years before sale, then you can exclude
the first $250,000 of capital gain. (500,000 if married/joint)


So in your case, if you sell it after owning and living in it for
at 2 of the five years before sale, you exclude that gain.

There no longer is any need or any tax benefit from replacing the
home.A  You can take advantage of this benefit every 2 years.




>Dilemna:
>If I sell this house, I am definitely moving out of Los Angeles and
>will be looking for a less expensive home and way of life.  So where
>does that put me as fas as paying taxes on the profit?  I mean
>seriously, I have no intentions of buying another home for $370k, my
>god.
>
>And if the taxes eat up the profit, then maybe I should just stay in
>the home and not worry about any of this. ;D
>
>The only reason I am condisering selling is because as you can see
>what a profit but if the profit is eaten up in taxes then there's
>really no point right? I mean I can stay in los angeles and continue
>to live like so.
>
>Just looking for some educated opinions and or experience. THis is my
>first home and i bought it because I had been renting it for a 16
>years and I got an excellent deal. Was never an investment property
>but it appears it may have turned into one. ;)
-- 

__
Art Kamlet     ArtKamlet @ AOL.com   Columbus OH    K2PZH