Real Estate Tax

[sna1rwc]

CA - I built a custom home and have physically lived in it for 1 1/2 years but I have had the land for 3 years and I began construction 2 years and 2 months ago. Will I get hit with cap gains if I were to sell today because I have not physically lived in my house for 2 years or will I get the 500K tax free based on the construction loan origination date?

 

[tdavidl]

worst case is you prorate your potential gain exclusion (you mention $500k so i assume you file jointly) based on the ratio of 1.5 yrs to 2 yrs. so your max gain exclusion could be 75% of $500k or $375k.

check out this link & pub 523 for more detials.

http://search.irs.gov/pub/query.html?col=catfoin&col=catpub&col=catnote&charset=utf-8&ht=0&qp=&qs=&qc=&pw=100%&ws=0&la=en&qm=0&st=1&nh=10&lk=1&rf=0&oq=&rq=0&si=0&qt=home+sale&criterias=1b&Go.x=5&Go.y=8