We are planning on selling our home in New Braunfels around the first of the year. We will have made a nice profit on the home and I am trying to find the best way to pay as little taxes as possible. We would like to use the money to pay down our main home but tax wise I don't believe that does anything for us.

Is there a better solution other than putting it towards another home purchase?

Assuming this is a second/ vacation home?

It was main home when we bought it if that matters. However as it stands today it's a rental house for the last 2 years.

You can also do a 1031 Exchange. We did that earlier this year on my wife's house that we used as a rental for 10+ years. Doing so saved us about $135,000 in state and federal income taxes.

ToddyHill said:

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You can also do a 1031 Exchange. We did that earlier this year on my wife's house that we used as a rental for 10+ years. Doing so saved us about $135,000 in state and federal income taxes.

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I assume you just bought another property with the 1031 or can you put the cash towards an existing such as your home?

How does Taxing work on within a year sale, using that money to purchase another home??

I am assuming it would be taxed as usual.
What is the minimum number of years to avoid capital gains taxes on a home purchase?

I have questions about the capital gains taxes as well, while we're on the subject.

We closed on our house in College Station in early August of last year. Planned on being in it for longer, but due to unforeseen work changes I think we will end up making a move around the time school ends next year which would leave us a few months short of two years. We stand to make a decent amount of money due to the bonkers market; is it worth it to delay moving to hit the two-year mark and potentially miss the prime selling window?

ElephantRider said:

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I have questions about the capital gains taxes as well, while we're on the subject.

We closed on our house in College Station in early August of last year. Planned on being in it for longer, but due to unforeseen work changes I think we will end up making a move around the time school ends next year which would leave us a few months short of two years. We stand to make a decent amount of money due to the bonkers market; is it worth it to delay moving to hit the two-year mark and potentially miss the prime selling window?

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You qualify for a partial exclusion. Look at Pub 523:

https://www.irs.gov/publications/p523#en_US_2021_publink10008996

Does Your Home Qualify for a Partial Exclusion of Gain?
If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.

[url=https://www.irs.gov/publications/p523][/url]Work-Related Move
You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.

• You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.
• You had no previous work location and you began a new job at least 50 miles from the home.
• Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

If I move into a home in July 2021 but don't become owner until Sept 2022, would two years be July 2023 or Sept 2024?

Whenever the purchase transaction closed, so Sept 2024…assuming there was nothing crazy unusual about it.

Quote:

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I assume you just bought another property with the 1031 or can you put the cash towards an existing such as your home?

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We did a 1031 on a rental we sold. The money has to go to a "like" property - another rental - can't be applied to your primary residence.

Was your house in New Braunfels still homesteaded the last couple of years, or did you homestead your current house? That would be an issue, I'd think, but I don't know for sure.

And yes, the taxes on 1031's are just deferred - you'll pay them eventually.

ByrdEWhiteTrash said:

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ElephantRider said:

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I have questions about the capital gains taxes as well, while we're on the subject.

We closed on our house in College Station in early August of last year. Planned on being in it for longer, but due to unforeseen work changes I think we will end up making a move around the time school ends next year which would leave us a few months short of two years. We stand to make a decent amount of money due to the bonkers market; is it worth it to delay moving to hit the two-year mark and potentially miss the prime selling window?

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You qualify for a partial exclusion. Look at Pub 523:

https://www.irs.gov/publications/p523#en_US_2021_publink10008996

Does Your Home Qualify for a Partial Exclusion of Gain?
If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.

[url=https://www.irs.gov/publications/p523][/url]Work-Related Move
You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.

• You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.
• You had no previous work location and you began a new job at least 50 miles from the home.
• Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

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I am moving from DFW to Hou for work and have owned my current home for 1 year. Am I reading it correctly that I can take a partial exclusion on capital gains of 12 months/24 months X $250,000 (married) = $125,000?

You'd take 12/24 x $500K since you're married.