Do I pay Capital Gains on Cabin Sale?
We bought a fixer upper cabin and closed on June 30th 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 September 19th 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?
Answers
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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:
Information regarding like kind exchanges & the requirements for that transaction can be found here:
