Capital Gains on primary residence???

[NIcholas Hamel]

Hey everyone, got a question for you. We hve a debate going on. We bought our home for 330k 3 years ago and sold for over 500k. Do we pay capital gains tax? Thanks!

[Dave Foster]

@NIcholas Hamel, Your parents accountant is partially right.  As long as they purchase replacement investment real estate worth at least as much as their sale they will defer all tax.  But that is exactly what a 1031 is.  And the first unbreakable rule of a 1031 exchange is that you have to follow the entire process in order to defer all tax.

So unless they use a qualified intermediary, adhere to the reinvestment, titling and timing requirements they will not defer anything.