Q: I bought some vacant land in early 1991 with the hope of building my retirement home on it. However, now that the housing market is so weak, I cannot sell my house, build the new home and move into it by early 1993. I believe I must move into my new home within 24 months of selling the old one if I want to roll over the gain from my current residence. Isn't that true? Should I sell the land and then repurchase it to restart the 24-month period?
A: Relax, you have more time than you think. The law provides that you purchase your replacement property within 24 months -- either before or after -- of selling your current residence. Then, you have an additional 24 months after selling your current home to move into your replacement house. This can give you up to four years from the time you purchased your land to move into any home you build on it. Under this timeline, you would have until early 1995 to move into your newly constructed home on the land you bought in 1991.
Q: Many years ago I purchased a second home that I had hoped to use as my retirement home. However, now I realize that if I move into this home, I cannot roll over my gain from the sale of my present residence since the second home won't qualify as a true replacement because it was not purchased within 24 months of the sale of my current home. Can I sell my retirement home to a friend, and then repurchase it to qualify for the rollover?