Selling Home and attorney holds funds in a escrow account til another property is purchased.

Previously my husband and I had sold some property and our attorney put the money in an escrow account until we found another piece of property to purchase. That way we never touched the funds and didn’t have to pay taxes. I don’t remember what this is called. We have a rental home that we are considering selling and would like to handle this in the same way. Can you tell me what this called and what is the time limit the funds can be held in escrow?

Asked on June 29, 2009 under Real Estate Law, South Carolina

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I am not at all sure that this would work the same way with a rental property.  Unless the tax law has changed since the last time I looked (which is always possible, tax laws change fairly frequently), you are allowed to "defer" (put off) capital gains on the sale of your home, by re-investing the money in a new home for a larger price, but this isn't available for rental or investment property that isn't your primary residence.  Ordinarily, you have two years to buy your new home;  I'm not sure whether having your attorney keeping the money in escrow can be used to extend that time.  You might want to talk to your CPA or tax preparer about this one.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.