Guest John Cobbler Report post Posted February 27, 2004 Hi, I am totally aware of having to pay cap gains tax if you buy a home of lesser value within the 2 year frame. However, are there any special considerations where you wouldn't? My wife and I will be filing for divorce a year and a half after buying this home. We had initially sold our respective homes when we got married and put our profits into our new home. Now, those profits will take a hard hit if cap gains tax is applicable. Will this be the case or not? Thank you. John Share this post Link to post Share on other sites
Dave T 0 Report post Posted February 27, 2004 John, If you and your spouse each sold your respective homes a couple of years ago, you each took (or should have taken) the capital gains exclusion on the sale of your primary residence in the tax year of the sale. The capital gains tax exclusion is not available again until two years have elapsed from the date of the most recent sale of your primary residences. If you don't sell for another six months, even though one of you might vacate the home, the capital gains tax exclusion would once again be available to you. There is no rule that requires you to replace your primary residence, nor must you buy one of equal or greater value, to avoid capital gains on the sale of your primary residence. There are hardship exceptions to the two year ownership and use rules but I don't know if these exceptions also apply to the restriction against taking the capital gains exclusion only once in a 24 month period. Consult a professional tax advisor for specific details. Share this post Link to post Share on other sites
Guest John Cobbler Report post Posted February 27, 2004 Thank you so much for your prompt response. Share this post Link to post Share on other sites
