Do I pay Capital Gains on Cabin Sale?

Tax2023mkd

We purchased a "fixer-upper" cabin and closed on 6/30/2023, taking out a $210K mortgage, before we were able to sell an existing cabin. We sold the existing cabin, which was owned with no debt, and closed on it on 9/19/2023. The new cabin price was $380K and the old cabin sale price was $185K, clearing about $175K after the realtor and other fees. We purchased land and built the cabin that we sold for approximately $165K. We are using the proceeds from the sale of the original cabin to create a cabin that is mold-free, critter-free, and inhabitable. Will we still need to pay some type of capital gains on the proceeds from the sale of our original cabin?

KFine3325

Generally speaking, a vacation home or property isn't eligible for a like kind exchange, therefore the sale of the first cabin would need to be reported on your tax return. You may be eligible for a homeowner's exclusion for that sale if you meet certain qualifications which you can review here: https://www.irs.gov/taxtopics/tc701

Information regarding like kind exchanges & the requirements for that transaction can be found here: https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips