Selling House Less Than 1 Year...Afraid of Capital Gain Tax HELP!

[Simon Gill]

Hello All! 

I have recently bought a house in January 2016 but am considering taking a job offer that would force me to relocate. If I sell this house I will profit, but how can I avoid taxes on this profit? I plan to rent while I get situated at the new place so no plans to buy in the short term.  Can you please advise me couple options on how to avoid capital gain tax?  Do I need to fill out a 1031 exchange and defer the tax on the profit?  I'm not a flipper; however, I read this blog. 

https://www.biggerpockets.com/renewsblog/2014/07/10/paying-taxes-fix-flip-properties/

[Blake Meester]

@Simon Gill

IRC§121 provides the $250k/500k exclusion that the others are taking about. It sounds like you would not meet the general test, however, there is a partial gain exclusion for people that sold their residence by reason of a change in place of employment.

If you would like to read the law check out IRC§121(c) and Reg 1.1121-3-(b). A more plain English explanation can be found in the IRS Publication 523. Or google the 121 partial gain exclusion… but don’t believe everything you read on the internet.

It would likely benefit you to seek the assistance of a real estate oriented tax professional to make sure you qualify for the partial exclusion and the reporting is done correctly. The facts and circumstances specific to your situation matter.