Tax Time Depressing? Home Ownership May Help
Tax Time is a great time to think about ways to save money on taxes. It can be a little overwhelming to see how much we give to Uncle Sam every year. There are two different scenarios where you can sell real estate and not have to pay capital gains and/or any tax at all. (Check with your tax adviser for details.)
The first scenario offers homeowners a way to exclude up to $250K ($500K for joint filers) from taxable income of capital gains on the sale of their home. Two criteria must be met in this scenario: 1) the homeowners must have maintained the home as their principal residence in two out of the preceding five years, and 2) the homeowner may not have claimed the capital gains exclusion for the sale of another home during the previous two years.
The second scenario is the 1031 Exchange. This is when a trade, business or investment property is sold and any gain from the sale isn’t recognized as income when it is “exchanged” for a property of like-kind (meaning when the money is re-invested in real estate of like-kind). This is a fabulous way to roll income into another investment.
We hope this information will help you keep more of your hard-earned money.
If we can assist you in learning what your home is currently worth or in finding your dream home, please reach out to us. We would be honored to add you to our list of satisfied clients!