The Listen to Lawrence Letter: Capital Gains question

CLIENT QUESTION:

Is there still a capital gains tax when I sell my house and buy another one the same year?

MY RESPONSE:

The answer is that it depends. If the house is sold for more than you paid for it, plus money you put into it for capital improvements, there is likely to be a capital gain. However, we each get a capital gain exclusion of $250,000 ($500,000 for married couples) for the capital gains on our principal residence (if it was our principal residence for 2 out of the last 5 years).

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