When do I Pay Taxes on a Home Sale? AARP Tax Aide Program
When do I Pay Taxes on a Home Sale : AARP Tax-Aide Program
A: Sorry, your first assumption is correct. You will have to report the gain. Use Schedule D to figure out your profit.
Since you describe this as a second home, it counts as personal-use property, not investment property. In the case of investment or business property, there is something called a like-kind exchange, a transaction in which you sell a property and purchase another business or investment property of like nature or character. In that case, your gain, if any, is not recognized but is deferred. Personal-use property is not eligible for like-kind exchanges.
These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to those age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures
When do I Pay Taxes on a Home Sale
Q: I purchased a second home, in another state, eight months ago. I am about to sell it for a profit. I believe I will have to pay taxes on the gain. Can I reinvest the gain and not have to pay tax on the profit?A: Sorry, your first assumption is correct. You will have to report the gain. Use Schedule D to figure out your profit.
Since you describe this as a second home, it counts as personal-use property, not investment property. In the case of investment or business property, there is something called a like-kind exchange, a transaction in which you sell a property and purchase another business or investment property of like nature or character. In that case, your gain, if any, is not recognized but is deferred. Personal-use property is not eligible for like-kind exchanges.
These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to those age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures