Need Help

[Pshawn5]

hi everyone,
well my dad has sent me on a mission since he says i spend so much time on the computer,but i have no clue where to look, so i come to you guys for help,hopefully you guys were be able lead me to the answer.

well my dad is considering selling our home in los angeles,ca but he has a question. we have been renting the property for the last 4 years, and well if we sell the house and dont buy another house we will be paying uncle sam a huge lump of money,due to the capital gains tax( i think thats what its called), so my dad wants to know how long after we sell the rental property do we have to buy a new home so uncle sam doesnt take away all the money. he has heard from one person 45 days and another person 6 months. if it's 45 days it's quite hard to find the right house in that time period. 6 months is better. but we know one thing for sure tho,if we buy a new home that home has to be a rental home for 2 years,since the house we sold was a rental home. ...so anyone know how long we have after the sale of the home we would have to buy the 2nd home? or know where i could look to find the information?? thanks in advance!

[krusty the klown]

Is this any help?

http://www.irs.com

I are from the other side of the Pond, so I don't know about your taxation system.

There are independent financial advisors & citizens advice bureaux over here - do you have anything similar?

What about talking to your bank?

Do you know anyone who's an accountant?

[cadetstimp]

I belive the rule is when you buy a primary residence (not investment property) you may resell within two years without paying capitol gains. I believe, the fact that it has already been owned for four years means you'll have to pay.

The determination for primary residence vs. income property is at the time of buy/sell in the escrow and loan paperwork. Once successfully purchased as a primary residence - if later rented it is rarely "tracked" as an investment property. A lot of people make a lot of money - with less down - by 'moving' from primary residence to primary residence as they leave renters behind in the houses already purchased. They then sell those 'rentals' before reaching the two year mark to avoid capitol gains. Even though a lot of people do this the IRS can still audit and 'discover' the property to be an investment property thus invoking capitol gains, but this rarley happens. Especially, since the loan and escrow process makes such a clear determination between investment property vs. primary residence due to the required amount of down, credit check, and title insurance differences involved between the two different types.

This is how it is in California anyways....you might want to check with a broker and also a tax preparer such as H&R block. Checking the IRS web site is good, but I have a feeling it will only demonstrate a strict description in their favor (i.e. primary residence only means where you live for the duration of the two years) which may not match what is practiced and enforced on a daily basis.