Generally, you must pay taxes on any gain on the sale of a personal residence. However, there are two tax provisions that can help homeowners defer and even exclude some or all the tax on the gain. First, in cases where a new home is purchased, the tax laws provide that any gain is deferred to the extent the sales price of the old home is reinvested in the new home. Therefore, if the new home cost as much or more as the old home, all the gain is deferred. However, if only a portion of the sales price is reinvested, only a portion of the gain is deferred.
Retirees often consider moving to different locations upon retirement.
Moving to a different state raises several tax issues which will impact your projected living expenses. Second, states tax retirement pensions differently by allowing varying amounts to be received tax-free. In addition, some states provide property tax relief for individuals over age 65. You should also consider the state sales tax rate. Finally, states vary on the taxation of social security benefits.