AboutCarole Dunton Expertise Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions.
General knowledge of schedule C for small sole proprietorships.
No experience in corporate, estate, partnership or large business returns.
Experience 9 years as tax preparer for major national firm.
Question my x-husband and I built our home in Alaska out of pocket over 20 yrs ago. Bldg records are lost due to divorce/fire. The home is in my name, valued at $300,000 with a 2 yr old fixed rate home equity loan of $35,000 on it (for raw land). I just purchased a second home (condo) in Tennessee, with a $121,000 fixed rate 5.5% loan. My plan is to rent the condo for 2+ yrs, retire in 2.9 yrs, sell my Alaska home & move into the condo - paying off all outstanding loans.
How do I avoid capital gains taxes? Do I need to "tweek" my retirement plans to avoid paying more taxes? Do I need to re-invest the money from my Alaskan home? if so, within what timeline?
Answer Hi,
If the Alaska home was your main home and your owned and lived in it for 2 years during the 5 year period preceding the date of sale, you can exclude $250,000 gain. Otherwise there is no way to avoid capital gains tax by investing in something else or by doing something with your retirement plan.
