Capital Gain Taxes from a Home Sale

17 02 2005

Property owners can sell their primary residence every two years and buy a bigger home, using the profits as a way to “avoid capital gains taxes.” While true, only $250,000 in capital gains may be shielded by an individual ($500,000 by a couple) on each home sale. Anything in excess of this is subject to capital gains taxes. More IRS info on capital gains taxes from a home sale:
http://www.irs.gov/faqs/faq10-1.html.

A homebuyer could lose the “$25,000 homestead exemption for the first year on a new house.” In this reference to the homestead exemption of a newly constructed home, it was assumed that the owners were not permanent residents of the home on Jan. 1 of the tax year. Of course, a new homebuyer could close on a property Dec. 31 and move in the next day, Jan. 1. In this case, the newly constructed home would qualify for the homestead exemption because the owners were permanent residents as of Jan. 1 of the tax year.

More info on exemptions from the Florida State Department of Revenue:
http://www.dor.state.fl.us/dor/property/exemptions.html.


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