How to avoid capital gains tax on house sale

[Anonymous]

I’m single and bought a house for 800k a few years ago in a neighborhood that seems to be increasing in popularity. If it goes up to 1.2 million, then I already exceed the 250k exclusion. If and when I sell, my LT partner and I plan to move to a lower COL area where houses costing 400k are bigger and fancier than what we want, and we plan to buy together with another 200k or proceeds from a previous sale on their home.
I’m not sure there will be enough house there for me to roll it all into.
What should my strategy be? We are considering marriage but planned to wait until my kids (prev relationship) are through college.

I have put some money into updates (hardwood floors, newer energy efficient fancy water heater, etc) but not enough to really affect the basis all that much.

The capital gains on home sales really bothers me because it feels like a tax on savings as home prices rise along with COL.

[Anonymous]

Hmmmm could you get married and put her on the deed so you’re at $500k?

Maybe ask an accountant.

[Anonymous]

I thought the capital gains thing was changed?

[Anonymous]

Is this a second home or investment property? I’m not sure the capital gains tax applies.

[Anonymous]

Get married.

[Anonymous]

PS. You actually don’t have to put the spouse on the deed. All you have to do is be married filing jointly.

[Anonymous]

There’s no rollover anymore- it’s been decades since you could do that.

You have the $250k exclusion right, and it is doubled to $500k if you are married. Having to pay capital gains tax because your house increases so much in value is a good problem to have!

[Anonymous]

Anonymous wrote:There’s no rollover anymore- it’s been decades since you could do that.

You have the $250k exclusion right, and it is doubled to $500k if you are married. Having to pay capital gains tax because your house increases so much in value is a good problem to have!

If you're planning to get married anyway, maybe just do it quietly. Seems worth it financially!

[Anonymous]

Pay the tax. If market tanks, you can pick up great stocks 50-60% off. Once it turns around, you will double your money. Bull markets last under a year.
I argued with several family members about selling two properties. They wanted top dollar while I wanted the money out. Meanwhile, my stocks and crypto did 8x and 4x in 2023-2024.
They ended up selling for what I had told them the home was worth a year later. Still waiting for the cash. Good that market crashing again.

[Anonymous]

Anonymous wrote:Is this a second home or investment property? I’m not sure the capital gains tax applies.

You pay tax on any gains of more than $250K if filing singly or $500K if filing jointly.

[Anonymous]

^^^ If it’s a personal residence.

[Anonymous]

Anonymous wrote:Pay the tax. If market tanks, you can pick up great stocks 50-60% off. Once it turns around, you will double your money. Bull markets last under a year.
I argued with several family members about selling two properties. They wanted top dollar while I wanted the money out. Meanwhile, my stocks and crypto did 8x and 4x in 2023-2024.
They ended up selling for what I had told them the home was worth a year later. Still waiting for the cash. Good that market crashing again.

If you want to speculate on the market, you can get a loan.

It's great for you thay you made money speculating, but every dollar you made came from someone who tried the same thing but lost.

[Anonymous]

Anonymous wrote:Hmmmm could you get married and put her on the deed so you’re at $500k?

Maybe ask an accountant.

Do you mean put HIM on the deed?

[Anonymous]

Anonymous wrote:There’s no rollover anymore- it’s been decades since you could do that.

You have the $250k exclusion right, and it is doubled to $500k if you are married. Having to pay capital gains tax because your house increases so much in value is a good problem to have!

+1 OP what you said here -

”I’m not sure there will be enough house there for me to roll it all into.”

That hasn’t been a thing since the Clinton administration.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hmmmm could you get married and put her on the deed so you’re at $500k?

Maybe ask an accountant.

Do you mean put HIM on the deed?

It is not necessary for married people to put the spouse on the deed to get the increased exemption. See Eligibility Step 2: https://www.irs.gov/pub/irs-pdf/p523.pdf