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Author: TaxService Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Re: primary residence Date: 9/7/1999 4:11 PM
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Is there a way to reduce/eliminate capital gains tax when using the
proceeds to purchase a primary residence?

Within in what time frame (if any) must you put a mortgage on a primary
residence to be able to
use the interest payments as a 1099 deduction? (like a cash out refinance)


***I'm not sure I understand the question but let's have a go at it!=:)

If you sell your old primary residence (one in which you lived for two out of the last five years), $250,000 of gain is excludable from your income($500,000 in the case of a married couple filing jointly). For the majority of people, this means there is no capital gains tax to be considered unless you used the property as a rental property. In that case, any depreciation allowed/allowable would be subject to a 25% recapture tax.

If you purchase a new home, and itemize deductions on Schedule A (Form 1040), you may deduct interest, points paid by you and/or the seller, and taxes paid on the property in 1999. This does not include taxes that are held in escrow for the payment of future taxes.

Hope that answers the question. If not, c'mon back 'n we'll try to do better!=:)

"Jack"
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