Can I defer capitol gains when I sell my stock options by investing the proceeds in a primary residence?

Can I defer capitol gains when I sell my stock options by investing the proceeds in a primary residence? I know some taxes on investments can be defferred if rolling into a house (like an IRA). I'm just wondering if selling Incentive Stock Options can also be rolled into a primary residence to defer the taxes.

Alternately, what about rolling the capitol gains into an IRA?

You cannot do that as far as I'm aware.

Your best bet is going to either hold the options and get the favorable capital gains rates for ISO's, or try and off-set the ordinary income gain with some losses from another investment.

For the record, you cannot roll equity investments into a residence to avoid taxation. You are however allowed a $10,000 withdrawal without taxation / penalties from a Roth IRA for a first-time home purchase.

I'd suggest hooking up with a good accountant who specializes in options taxation. A misstep here could cost you thousands! Good advice will only cost you a couple of hundred!

Good luck!

Ken Clark
Certified Financial Planner

no because it's not considered a retirement account.

those stocks are considered part of your liquid assets.

if you had gold..and sold it....would you get tax benefits?

i think not!

nope. It's like apples and oranges. You need to pay on the capital gains. The best deal is to complete the capital gains in the same year as you buy your home. At least you will have an offset on the capital gains with the interest and taxes on your home.

No.

What you can do is convert the stock option to stock, hold the stock for 12 months and then sell the stock as a long term capitol gain. When you do this, you'll be hit with Alternative Minimum Tax (AMT) on the initial conversion. I would only recommend this path if you're absolutely sure the company is in a great position. Lots of folks have done this to reduce the tax consequences and then when the company tanked, they were in a position where they owed quite a bit in taxes but had no stock equity to pay the bill.

Probably best course of action is to exercise some for cash and pay the tax on them as ordinary income and exercise some and hold the stock for long term capital gains tax.

I'm not a CPA or Financial counselor, just a guy who worked in tech long enough to have quite a few stock options.

This question actually belongs in Taxes.
Assuming US Federal taxes, you can't defer the gain for two reasons:
1. The rules changed several years ago for deferring gains from the sale of a personal residence by buying another home. Instead of allowing a deferral, the current law allows you to exclude up to $250,000 ($500,000 if married filing jointly).
2. Only gains from the sale of a primary residence could be deferred in this way under the old law.