Tax on sales profits
Answers to real estate questions as appearing
in the Houston Chronicle
By george stephens, CRB, AND Charles J. "Chuck" Jacobus, JD
Dear George: If you profit from the sale of your homestead, does all of the money have to be rolled into another property to avoid paying taxes? For example, if I sold my house and made $50,000, can I spend $10,000 and invest the remaining $40,000 in another property without any tax penalty?
Answer: There is a tax exclusion available that doesn't require you to reinvest your gain. If you meet the IRS requirements, you can exclude $250,000 of the gain, or $500,000 if you're married and filing jointly. Read page 10 of IRS Publication 523, and check out IRS Publication 544. It would be wise to hire a CPA, tax attorney, or similarly qualified professional to review your complete financial picture.
E-mail your question to "Ask George & Chuck" or fax it to 281/596-7591. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.
George Stephens, CRB, is the broker of ERA Stephens Properties. He is licensed as a mortgage broker in Texas and a real estate broker in Texas, Georgia, and Massachusetts.
Charles J. Jacobus, JD, is board certified by the Texas Board of Legal Specialization in Residential and Commercial Real Estate Law, and the author of Texas Real Estate Law and Texas Real Estate, both published by Thomson Publishing. He also teaches at Champions School of Real Estate and Houston Community College, and is an adjunct professor at the University of Houston Law Center.
George and Chuck are co-authors of Texas
Real Estate Brokerage and Law of Agency published by Thomson Publishing.
