Can you avoid capital gains taxes if you sell a house and use the proceeds to pay on a second mortgage for another house you already own?

Answer 1

The only way to avoid capital gains on the sale of a house would be to invest the money in ANOTHER house of equal or greater value. Sorry, it can't be a house you already own. No offense, but the rule referred to above, as found in Sect. 1034 of the Code, was repealed in 1997. Since then the ""rollover"" provision isn't required, and the following is the base operation: Exclusion of Gain on Principal Residence. A taxpayer can exclude from income up to $250,000 of gain ($500,000 for joint filers meeting certain conditions) from the sale of a home owned and used by the taxpayer as a principal residence for at least 2 of the 5 years before the sale. The full exclusion doesn't apply if, within the 2-year period ending on the sale date, there was another home sale by the taxpayer to which the exclusion applied. ( Code Sec. 121(a) , Code Sec. 121(b)(3) ) FTC