If you have sold a property and declared it to the IRS, it may be time to declare the reinvestment of capital gains, if any. You have up to 36 months after the sale to reinvest, provided it is for permanent home ownership.
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Reinvesting Capital Gains in Permanent Own Housing
There is an exemption from capital gains if the sale was of a permanent home and if one wants to reinvest in another permanent home, either through acquisition, construction, expansion or improvement.
Thus, there will be no place for taxation of capital gains, at least in the part that was reinvested, if the total gains have not been applied.
Capital gains should be reinvested between the previous 24 months and the 36 months after the sale.
Declaring Reinvestment of Capital Gains in Annex G of the IRS
It was in Annex G of the IRS, regarding the year of sale of the property, which declared the respective realization.
Admitting that he also declared that the surplus value that he had realized would be reinvested, now is the time to present to your IRS the reinvestment of the capital gains you have made.
Let's see what needs to be completed in Annex G.
In Tables 2 and 3, the year to which the income statement refers and the tax identification number (TIN).
In Table 5 - Reinvestment of the Realization Value of Real Estate for Own and Permanent Housing, in field 5001 you must mention the year of realization (sale) of the property.
In field 5002, you must refer to the table and field for that year, where the matrix identification of the good sold appears.
The value of reinvesting capital gains must be declared in field 5011, if the same was done in the third year, without recourse to credit. If it happened before, it must be declared in one of the previous tables (5007 to 5010).
In Table A1, you must declare the identification of the property that was the object of the reinvestment, according to the year in which it was reinvested. The last field, “share in%”, will be 100% if you are the sole owner, otherwise you will have to indicate your share in that property.
See more about calculating capital gains by clicking on the button below.
More details on filling in Annex G, in the Finance Portal.
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