3

I've owned and lived in my primary residence for about 3 years now. I am about to sell it in a few months and, when searching online for tax information, I saw many references to both Section 121 and the 1031 Exchange, and often the same article will mention them side by side, which can be confusing.

From what I understand, Section 121 allows you to exclude gains of up to $250,000/$500,000 (if you're single/married respectively), regardless of whether you buy a new home or not, provided that the home was your primary residence for two or more years in the last five years. This is a very different criterion compared to the 1031 Exchange (which seems to be for investment properties and not primary residences).

I just wanted to confirm that the tax exclusion provided by Section 121 is not contingent on the purchase of a new home.

Improve this question

1 Answer 1

Reset to default
6

From the IRS website:

You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale.

The exclusion is tied to the sale of home, and is contingent upon ownership/use of the home being sold. There is no requirement to then purchase additional property.

Improve this answer
1
  • 3
    The requirement to buy another property changed in the 1990's. People still ask about the rules because they sort of remember the old rules..
    – mhoran_psprep
    Commented Sep 16, 2019 at 15:29

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .