IF YOU'VE SOLD HOME, IRS WANTS TO KNOW

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, February 21, 1993                   TAG: 9302210060
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short
IF YOU'VE SOLD HOME, IRS WANTS TO KNOW
Don't forget about the Internal Revenue Service when you do the paperwork on the sale of your home.
You must file Form 2119, reporting the sale date, price and how much, if any, of the profit from the transaction is subject to immediate taxation. If you sold your home last year, file the form with your 1992 tax return.
The first rule when making any kind of real estate transaction is to keep good records - and keep them forever.
In general, any profit from the sale of an investment is considered a capital gain and fully subject to taxation. But special rules apply when the investment was a principal home.
If you sold your principal home in 1992 and bought or will buy a new one costing at least as much, tax on the entire profit is deferred. But you must buy and move into the new home within two years - before or after - of the date you sold the old one. Military personnel often get even longer.
If your new home cost less than you got for the old one, you will have to pay tax now on part of the profit.
Publication 523, free from the IRS, explains how to calculate and report the gain on the sale of your home.
If you (or your spouse) were 55 or older on the date you sold your old home and it had been your principal home for at least three of the last five years, the first $125,000 of gain is tax-free forever. However, this benefit may be used only once in a lifetime. If one spouse used the tax break in an earlier marriage or while single, it is no longer available.

by Archana Subramaniam by CNB