A common question for sellers is if they will owe capital gains tax when they sell their home. The answer to that question: it depends. The capital gains tax law known as the Taxpayer Relief Act went into effect in 1997 but there is still a lot confusion over who pays what and why.

If you sell your home you will not have to pay capital gains tax if:

  • You are selling your personal residence.
  • You have $250,000 in profit or less if you are single and $500,000 if married.
  • You have lived in your home for two of the last five years.
  • The home is not an investment property.

The capital gains exclusion can be used as many times as you like as long as it meets all of the above criteria.

If you are going to make more thanĀ $250,000/$500,000 in profit you will be taxed at a 20% capital gains tax rate on the amount over the $250,000/$500,000 threshold.

There are exceptions to the rule. You may be eligible for a tax break if:

  • You need to sell your home because a change in health.
  • You need to sell your home because of a long distance relocation.
  • You are in the armed services and moved to fulfill your service commitments.

Your individual tax situation may be different, so make sure to consult a qualified tax accountant or attorney.

 

Lakeville, MA:

This Single-Family in Lakeville, MA recently sold for $173,000.
This is a Cape style home and features 6 total rooms, 2 full baths, 3 bedrooms, 0.79 acres, and was sold by
Larry Costa REALTORĀ® – CENTURY 21 Classic Gold

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Home Remedies

On November 18, 2016 By
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