Time is running out to reinvest profits from home sale


December 06, 1992

Q: I sold my house in July 1991 and used the profits to start a small business. Although my business is growing, it is nowhere near the level required to save for a down payment or qualify for the purchase of a replacement home.

Meanwhile, the 24-month period for reinvestment of home sale profits is ticking away.

I doubt we will have the money we need by next July.

Is there any way we can get an extension of the 24-month rule?

A: Based on what you have told us of your circumstances, it doesn't appear that you would qualify for the three narrow exceptions to the 24-month reinvestment rule.

The IRS will extend the period for members of the military who are sent overseas, as well as for taxpayers who go on active military duty for more than 90 days during their 24-month replacement period.

In addition, workers who are sent abroad before the expiration of the 24-month period are entitled to an extension.

Beyond these tiny loopholes, the Internal Revenue Service offers nothing to ease the burden you face except the reminder that you should be sure to include the cost of any and all capital improvements you made to your home to reduce the taxable gain you will have to report -- and pay taxes on.

Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.

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