Aug. 25, 2008
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 a question to ask George & Chuck or fax it to 713-978-6684. 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.
