New Tax on capital gains

[Clark Kahawaii]

Hey guys so I was talking to a friend who is moving into a new house and he’s selling his previous one. He was telling me about one of the new laws that was enacted this year that in order to avoid capital gains tax when selling a “personal residence” you NOW have to have lived in the property for 8 years. (Previous was 3 I think?) He had been living in the property for 4 years and was expecting not to pay any taxes on the gain but is going to have to now. Is that correct? Or does it only take effect on new properties? (Sounds like wishful thinking haha) Has anyone done any deeper research on this new law? And has anyone done anything creative to circumvent it? Thanks guys!

[Daniel Hyman]

Clark Kahawaii

At one point the section 121 exclusion was being re-evaluated. There was talk of switching to 5 out of 8 years. But in the end, it remains as it was. You can exclude up to 250k if single or 500k if married filing jointly as long as you lived there for 2 out of the last 5 years.