Proceeds from sale of real estate

[hugh]

What is the name of your state?
North Carolina
When I sell my home, and after paying off the mortgage and any other fees, I am left with $75,000, do I have to re-invest that $75,000 within 12 months, or have to pay tax on it? Due to a job loss and some medical expenses, I would like to rent for at least a year to clean up my debt and credit report, but that may depend on what the law is about reinvesting my proceeds.

Thank you,
Tom

[tranquility]

What you are "left with" is irrelevant to how much profit you made on the property. It is a mistake many people make who refinance. The amount you realized less your basis is your gain. That is the amount on which taxes are calculated.

The reinvestment rule is long gone. Today, people who own and live in as their personal residence property for 2 of the last 5 years can exclude $250,000 of the gain. ($500,000 if married filing jointly.)

[efflandt]

You have to figure out your gain, ie, the difference between what you sold it for minus allowable expenses, minus what paid for the home and allowable purchase expenses or captial improvements. If you lived in the home at least 2 of the past 5 years up to $250,000 is not taxed ($500k if married).

For details see [url]http://www.irs.gov/pub/irs-pdf/p523.pdf[/url]

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