Info for SellersWhether you realize it or not, the biggest and best investment you'll ever make is probably in your home. As such, you should want the best team on your side, working with you towards your goals.
HOMEOWNERS! Are you aware of the big gift that Congress has given you?!!!
Under current tax laws, for sales of a principal residence after May 6, 1997, married couples may be able to exclude up to $500,000 of profit from their taxable income. Individuals filing separate returns may exclude up to $250,000 each.
That's right, IF you comply with the IRS rules, there's no taxes due if you sell your home and if your profits are less than those limits. And you can use this exclusion once every 2 years.
For example, if you buy a house for $100,000, live in it for 2 years and then sell it for $200,000, that $100,000 profit is yours, tax free.
What's the catch? Well, IRS has set some rules that you MUST follow to exclude up to $250K from your taxable income.
You must meet ALL the following conditions:
1. Ownership Test - You must have owned the home as your principal residence for at least 2 out of the last 5 years before the house is sold. If you are married, so long as either spouse meets this requirement, the exclusion of gain applies.
2. Use Test - You must have lived in the home as your primary residence for a minimum of 2 years out of the last 5 years. Both you and your spouse must meet this condition.
3. You did not exclude gain from the sale of another home in the last 2 years. Both you and your spouse must meet this condition.
Please read the IRS publication "Selling your Home" for the most current information, requirements for taking the exclusion and tax laws.
Please consult your CPA before entering into a contract. If you have been thinking about moving to a bigger home, it might be time to do so.
Home prices have appreciated greatly and interest
rates are at its lowest. The result is low mortgage payments and
your profits might be tax-free!
Word of Caution: The information stated on this website is for general information purposes only. The subject of taxation is complicated and should be discussed with your legal tax counsel. We are not tax experts nor do we claim to be. The tax laws change frequently and must be referred to prior to entering into any sales contract. Please consult with your tax specialist before entering into any binding sales contract.