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Category: Tax
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Experience:  CPA with tax experience.
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If you sell your home for $420,000 and buy your new home for

Resolved Question:

If you sell your home for $420,000 and buy your new home for $225,000 do have
to pay capital gains and how much? House sold in NY and new house is in Fl.
Submitted: 6 years ago.
Category: Tax
Expert:  JKCPA replied 6 years ago.

Thanks for your question. If you sell your main home, you are entitled of up to a $250,000 exclusion (or $500,000 if you are married). You have to have resided in this home for at least 2 of the previous 5 years for you to qualify to exclude the gain.

To figure your adjusted basis, you would take what you paid for the house originally plus any added improvements. Then, you would subtract this adjusted basis from the $420,000 you sold the home for. If this amount is less than $250,000 (or 500,000 if married), the sale of your house is non-taxable. Anything over these amounts would be considered a long-term gain to be reported on Schedule D. Buying your new home for $225,000 does not matter.
For more information, see IRS Publication 523

Hope this helps,
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