Expert: Hans Weber, Licensed Broker Associate - 12/10/2006

Question
Yes, I think this rates as a stupid question... sorry.  I am selling my co-op in Westchester County, NY (it is currently in contract).  Does the income from the sale get added to my work income, and then in April, I'll have to pay tax on a very huge amount of money?  Is there a time frame for me to reinvest the money into more real estate... or anything else that is tax-free, tax-deferred, or low tax?  I'd like to buy another property, but is there a time limit within which I need to do this?  I have a feeling that the money cannot just sit in my checking account forever, but I'm TOTALLY clueless and in the dark!!  Thank you!

Answer
Hi Loraine,

Thank you for your question, it is a good one.

I'm happy to hear you will have a nice profit.  That's great!

No, it is not added to your income and taxed unless the amount of the gain exceeds $250,000.  The gain is the amount of profit made on the sale, take the amount you paid for it and subtract from your selling price less selling expenses.  If that exceeds $250,000 then the excess would be taxed as a capital gain and not as ordinary income.

You are OK.

If you need help finding a new home let me know.  I specialize as a buyer's agent.

Hans