Statute of Limitations?

[HowardC]

I know someone from NJ who sold his house a number of years ago, filed the form stating that he intended to get a new house within the 2 year timeframe to defer taxes, but in fact did not move during that period. I'm not sure if he ever followed up with the taxes. Is there a statute of limitations, federal and/or state, on something like that? Also, I see some states offer "amnesty" programs occasionally. I don't suppose the Federal Gov't has ever done that? Might be a good idea.

 

[loku]

Unfortunately, the statute of limitations on the sale has not started to run yet. You owe the tax.

The following is from IRS Publication 523, Selling Your Home: Ch. 3 Rules for Sales Before May 7, 1997:

Statute of limitations. The 3-year limit for assessing tax on the gain from the sale of your home begins when you give the IRS information that shows:
1) You replaced your old home, and how much the new home cost,
2) You do not plan to buy and occupy a new home within the replacement period, or
3) You did not buy and occupy a new home within the replacement period.

This information may be on the Form 2119 attached to your tax return for the year of the sale, or on a second Form 2119 filed later. File the second Form 2119 with the Service Center where you will file your next tax return. If needed, send an amended return for the year of the sale to include in income the gain that you cannot postpone.


There has been no federal amnesty, but their new policy is that they will work with taxpayers on straitening out old problems (in your case, that would mean arranging payment terms.)