My neice bought a house for $30K. The next day she had a contract to sell for $125K (we should all have these problems). She closed a few months later. She never lived in the house, never collected rent, and she ended up owning it for only 3 months. She believes that if she buys another house within a set amount of time and lives in it, she won't have to pay short term capital gains tax on the $95k profit. I read IRS Pub. 523 and it seems that: I) That 2 year turnover rule has been replaced by a $250k exclusion.....II) She won't qualify for the exclusion because it wasn't her primary residence for 2 of the last 5 years.III) She better set aside a nice chunk of that profit to pay the MAN at tax time.Am I reading the law correctly? I would hate to give her bad advice (although the advice she's getting from her father and boyfriend seems to be pretty crappy). I would also hate to see her get in over her head (ie: buy something else without thinking of how she's gonna pay up). Thanks in advance for your answer.Bob B.
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