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iamarcin · Feb 7, 2006, 02:00 PM

My perents got a legal separation and so that my mother can live by herself she they are about to sell a 5 familly house in brooklyn. They bought this house about 10 years ago and for the past 7 we have owned it but have rented out the apartaments and have not lived in it ourselves. We own and have lived in a house on Long Island. I heard that we will have to pay 30% in taxes on the enrichment. We bought that house for 250,000 and we will now sell it for 950,000. How can I avoid this enrichment tax. We are planing on buying another house but does it will be a 1 family. Any advice will be helpful. Thank you.

AtlantaTaxExpert · Feb 7, 2006, 03:48 PM

Iamarcin:

The federal tax will be about 25%. The extra 5% is probably for the state of NY.

The only way I know to avoid this tax is to move back into the house for at least two years as your primary home (and that means the entire house, not just one apartment). You of course would lose the rent if you did this. Granted, that may save you about $225K in taxes, but would it be worth it?

Strongly suggest you visit a local tax professional to discuss this before you do anything.