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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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Suppose I sell my house for $4million. It has a cost basis

This answer was rated:

Suppose I sell my house for $4million.
It has a cost basis of $2million.
So I pay about $800,000 in taxes.
However if I put the $2million into the purchase of another house,
that is, I pay cash for a $2 million house, do I eliminate the capital gains?
Thank you

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.

Robin D. :

Unfortunately, selling your own and then reinvesting the money into another home does not offer relief from capital gains tax.

Robin D. :

If you lived in the home and owned it for 2 out of the last 5 years prior to selling, you are allowed to exclude up to $250,000 of gain if single and $500,000 if married filing jointly.

Robin D. :

That first $250,000 or $500,000 would not be taxable but you would need to apply tax and capital gain tax to the remaining portion of the gain on the sale.

Robin D. :

The old rules allowed for carrying forward your gain and applying it to the new home basis but those rules are obsolete.

Robin D. :

If this were not your home (investment property or rental use property) and you wanted to sale it and defer gain you could look at a 1031 exchange. You would want to make sure to follow the 1031 rules exactly which prohibit your receiving the money and making the purchase yourself.

Robin D. :

Your question was moved to the tax category so a tax expert could answer for you.

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.


 

Customer:

Did not get any answer

Robin D. :

I will switch to Q&A

Robin D. :

You should be able to see the post but here is a copy

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.



id="JA_chatMessage_1" class="JA_chatMessage JA_persAActive">

6:44 PM



Unfortunately, selling your own and then reinvesting the money into another home does not offer relief from capital gains tax.






6:45 PM



If you lived in the home and owned it for 2 out of the last 5 years prior to selling, you are allowed to exclude up to $250,000 of gain if single and $500,000 if married filing jointly.






6:46 PM



That first $250,000 or $500,000 would not be taxable but you would need to apply tax and capital gain tax to the remaining portion of the gain on the sale.






6:47 PM



The old rules allowed for carrying forward your gain and applying it to the new home basis but those rules are obsolete.






6:49 PM



If this were not your home (investment property or rental use property) and you wanted to sale it and defer gain you could look at a 1031 exchange. You would want to make sure to follow the 1031 rules exactly which prohibit your receiving the money and making the purchase yourself.






6:49 PM



Your question was moved to the tax category so a tax expert could answer for you.






6:49 PM



My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.


 



Robin D. :

Please advise if you can see the above now.

Robin D. :

I will switch to Q&A now so you can see

Robin D. and other Tax Specialists are ready to help you
Hopefully you will be able to see the posted answer now. If not here is a copy:
Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
6:44 PM
Unfortunately, selling your own and then reinvesting the money into another home does not offer relief from capital gains tax.
6:45 PM
If you lived in the home and owned it for 2 out of the last 5 years prior to selling, you are allowed to exclude up to $250,000 of gain if single and $500,000 if married filing jointly.
6:46 PM
That first $250,000 or $500,000 would not be taxable but you would need to apply tax and capital gain tax to the remaining portion of the gain on the sale.
6:47 PM
The old rules allowed for carrying forward your gain and applying it to the new home basis but those rules are obsolete.
6:49 PM
If this were not your home (investment property or rental use property) and you wanted to sale it and defer gain you could look at a 1031 exchange. You would want to make sure to follow the 1031 rules exactly which prohibit your receiving the money and making the purchase yourself.
6:49 PM
Your question was moved to the tax category so a tax expert could answer for you.
6:49 PM
My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.