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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3166
Experience:  IRS licensed Enrolled Agent and tax instructor
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I plan to sell my house for $225,000. I paid $120000 15

Customer Question

I plan to sell my house for $225,000. I paid $120000 for it 15 years ago. Ive made about $40,000 in improvements. I have another house in Louisiana which I owe about $50,000 on. Can I pay off the Louisiana house without having to pay capital gains tax on that part of the original house sale?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Unfortunately you cannot avoid capital gains by paying off another one property. However, there might be a solution. Did you use the house you plan to sell as your primary residence for at least 2 out of last five years?

Expert:  emc011075 replied 1 year ago.

You can exclude up to 250K of capital gains (500K if married filing jointly) if owned the property and it was your principle/primary residence for at least 2 out of 5 years immediately prior to sale and you didn't use the exclusion in the last two year.

Expert:  emc011075 replied 1 year ago.

There's also long term capital gain favorable tax treatment, if you are in 10 - 15% tax bracket, your capital gain rate is actually 0, no tax on capital gains. In higher tax brackets, except the highest one, your capital gain rate is only 15%.

The tax provision that allowed to postpone capital gains by re-investing it into another property had been replaced by the 250/500K exclusion.

Let me know if you have any questions.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.