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The Honolulu Advertiser
Posted on: Thursday, March 30, 2006

Tax-filing deadlines April 17, April 20

By Greg Wiles
Advertiser Columnist

Q. April 15 falls on a Saturday this year. Do I still have to file my federal income tax returns by the end of that day?

A. No. Tax procrastinators will have the entire weekend to do their returns.

The Internal Revenue Service is setting Monday, April 17, as the cutoff for filing this year because the traditional April 15 deadline falls on a weekend.

The deadline for filing your Hawai'i income taxes is April 20.

Q. I've lived in a four-bedroom home for 25 years and want to sell it now that my children have grown up. My wife and I plan to move to a one-bedroom condominium. Can I exclude profit on the home sale from capital gains taxes, and can I exclude the profit a second time if I sell the condominium two years later? G. Char, Ma'ili

A. You would be exempt on both.

Of course, there is no guarantee that a condo will increase in value over the next two years, so you may not have any capital gains to be taxed.

Nevertheless, current rules allow you to take the capital gains exclusion if the property was your principal residence at least two years out of the past five.

The Ma'ili house would fit this definition, as would a condominium if you live there at least 24 months.

In both cases you'd be able to exempt $500,000 of profit from the tax since you are married. Individuals can exclude $250,000 from the tax.

You'll fail to qualify if you've taken the exclusion in the prior two years. The IRS can grant exceptions to the two-year rule when people must sell because of a job transfer, health reasons or some unforeseen circumstances, including a divorce or job loss.

Much of the above comes from IRS Publication 523, "Selling Your Home."

Do you have a question about personal finance, taxes or other money matters? Reach Akamai Money columnist Greg Wiles at 525-8088 or gwiles@honoluluadvertiser.com