I seem to remember our current builder (Centex) mentioning something like this. I remember asking what would happened if my husband was transferred (military) and the agent said that that would not be a problem. My husband on the other hand does not remember this conversation. You have me curious. I think I will pull out our contract later to see if it is in there.

Best of luck to you! Hope your builder understands and you are able to sell....

You must reside in the home 2 of the last 5 years in order to avoid capital gains tax. There are exemptions for moving out of the area for work.

Marys1000, are you referring to whether you may owe capital gains on any profit you make from the sale? If so, you can shelter up to $250,000 ($500,000 for a married couple) of profit from a home sale if you meet the ownership and use tests of having owned and lived in your home for two of the last five years. That clock started ticking at settlement.

You're not quite there yet but...

There are exceptions under which you can claim a partial credit. Selling your home due to employment relocation is one of those exceptions, as long as the new location is 50 miles or more from your current home. For example, you've lived there 18 months which is 75% of the 24 months needed to fulfill the ownership and use tests. If you were to get a new job and sell tomorrow, you would be able to claim a partial exclusion of 75% of the $250,000 credit or $187,500...if I've done my math correctly.

Also, your gain is calculated on your selling price less your cost basis. Your cost basis includes the price you paid originally plus additional costs like the costs you incur to sell (an agent's commission), permanent improvements you made that improved the marketability of the home (like adding a patio or deck), certain costs leftover from your original purchase that were not tax deductible etc.

Given those facts, do you think you'll make a profit greater than $187,500? If not, you shouldn't be concerned.

For more information see IRS Publication 523 (Selling Your Home)at www.irs.gov

Unfortunately I will probably lose money not make money.

So... this rule applies basically only to the buying at original purchase price vs. selling price? I.e. I don't add all the other stuff I've done basically out of my checkbook to the original purchase price right? Not sure it will matter because I definately won't make 187,500:)

Also - on the other end, selling where I get my new job - do I have to worry about what I buy? I.e. do I have to spend equal to what I had here? Could I buy something less expensive or do I have to worry about taxes?

Thanks,

Mary

"Unfortunately I will probably lose money not make money."

Mary, if you're going to lose money on the transaction, then this is a moot issue. The two-year rule only applies to the taxability of any profits. Unfortunately, losses on the sale of your primary residence are not tax deductible.

Some companies will cover losses on a transfer if this is your case.

You might be thinking of a law some areas have where an owner-builder (unlicensed contractor) built their house then wanted to turn around and sell it, they often have a period of timr (a year or 2) they have to wait before they can sell it. This wouldn't apply to you.

Your current house doesn't influence your next house. There's no rule about having to spend the same amount of money or anything. (That would be pretty hard to do in a lot of cases.)

Great news on the 2 year rule.
As for the other, I thought there was some capital gains tax. I.e. I sell the house here for 300,000 and then buy one for 200,000. I would have to pay capital gains on 100,000 unless it was that one time retirement old/age shot.
Thanks much for the info everyone
Mary

The situation you're describing about rolling over the profits from one home sale to another is the old law which was in existence for many years. It changed in 1997 and is as described above.

The situation you're describing about rolling over the profits from one home sale to another is the old law which was in existence for many years.

Plus you had to actually have profits.