how long can you keep the profits on a home sale without a tax penalty?

[Jodi-FL]

my brother and his wife have been made an offer they can't refuse on their home (and it wasn't even for sale!) but they don't know if they'll be in the same town in 6 months. how long can they hold onto their profit before they have to put it back in real estate?

[Adrianne]

says they can keep it tax free as long as it was their primary residence at the time of sale for longer than 5 years and they made less than $250,000 on the sale.

When we sold our home last year, we did not (and still have not) spent the money on a new home. Hopefully we can next year. I have not paid taxes for last year yet but I was told by the realtor, the fed tax website and the state of NJ website that the above was true.

I would encourage them to check out or email their state taxation agency and find out what it says. They can also check the IRS website.

HTH,
Adrianne

[Mrs Mungo]

says they can keep it tax free as long as it was their primary residence at the time of sale for longer than 5 years and they made less than $250,000 on the sale.

Also, if you're military you don't even have to own the home for 5 years.

[Carol in Cal.]

Check with a tax person for details.
Married is better than single, and the required time is less than 5 years. Also, there is a prorate available in certain circumstances.

[Sunny]

If they are married, they can deduct $500k from the sale (profit=sale price - house cost+improvements)and anything over that is taxable by the Feds. Typically, the states are the same. You have to have lived there 2 of the last 5 years, and I think you can do this every 2 years. Not sure about that one though.

[Cindyg]

There is no federal capital gains tax now, but state capital gains tax will vary from state to state. They need to check on the regulations in their own state.