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Originally Posted by irishgrl
ok, Im not sure I follow you because as I understand it you must invest in something that is more expensive than what you just sold in order to take advantage of capital gains. So, assuming you did sell you place at a profit you are still required to buy something more expensive or you actually end up PAYING taxes. Thus, if you are constantly going up in price tag/mortgage payments, then it appears to me that you will likely bottom out (unless you are one of the lucky ones that get decent cost of living raises)
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No, there is no req. that you buy a more expensive house than you sold - you get the $250,000 exemption per owner occupant ever two years even if do not buy another house, buy a less expensive house, etc. In fact, if you get a less expensive one in an up and coming era, all the better for you. Trust me, I have done this
Go here
http://www.aicpa.org/pubs/jofa/oct2002/foran.htm for an explanation of the tax law.
This is a gift from Congress and I cannot believe it is still there.