Expert: Dick Dennis - 10/7/2008

Question
recently sold my home closed about 30 days ago to my son, the house was purchased by me from my parents who died left me a 1/3 of the house  and i purchased through the estate from my older brother and sister in 1975, the agreed selling price in 1975 was  almost 22,000$.00  I sold it to my son last month for approximate. 130K....who by the way had rented it from me since 2002....Id like to know ways I can invest these proceeeds to lessen my capital gains libility  any and all suggestions

Answer
Sorry to disappoint you , Rick, but if you want to not have to pay capital gains taxes on the sale of a property that was not your primary residence, you should have executed a 1031 tax-deferred exchange, meaning you take the funds from the sale of the house and purchase another income-producing property that costs more.

Upon the close of sale of the property you automatically became liable to any capital gains.

However, if the house had been your primary residence for two of the last five years, you could escape any taxable gain up to $250,000 or $500,000 if you have a wife who owned the property with you and you filed a joint tax return. Since I say, "two of the last five years" it could be the first two years of the five years. You would have to prove it to the IRS that you indeed lived there at that time. But you said you rented the house for the last six years. Doesn't sound too good.

Since you have owned that house partly or in fractions, I would suggest you consult with a CPA or your favorite tax expert to know how to handle this situation you now have. I do wish you well.

Dick Dennis           dixiedee13@aol.com