How Much Does Uncle Sam Take When You Sell Your Home?

Real Estate Agent with BHG Real Estate - Kansas City Homes SP00229578 2007027091

Many seniors worry about the tax consequences of selling their home and moving to a condo, adult living community or even into a mother-in-law suite in the home of one of their children. There are a few rules that can help you. Home sweet home 

Every 2 years, the law allows you to sell a home for up to $250,000 and take a tax exclusion. This applies to anyone, whether they're living on social security and retirement savings or still working for a salary. To be eligible, the home you sell must have been your primary residence for 2 out of the last 5 years. The tax exclusion is $250,000 for a single person; $500,000 for a married couple. 

Also, people who are over 55 years of age are allowed to take a one-time exclusion of $125,000 on the sale of a primary residence. The two exclusions can be combined once. So, a married couple could sell a home for $625,000 without incurring tax consequences.

What if your home will sell for $800,000? There's another rule that can help with that. If you kept your primary residence and rented it out, the excess money can then be rolled into another real estate property rental after the sale. In our scenario, that's a difference of $175,000. So, the $625,000 is tax free and the $175,000 can be used to buy a house, duplex, or multi-family building which would then be rented out for monthly income. If the sale of your home-turned-investment property nets more money, that amount can be rolled over into that amount of income producing real estate.

*Please check with your accountant, tax advisor, and real estate agent before making a move. Be sure that everyone is clear on where the money is going and how it will be declared on your tax return.

If you are considering selling your home, call 816-560-3758 for a private consultation to analyze value and condition in our current market.   

Kansas City Real Estate Year End 2011 Market Reports: Sunset Hill, Brookside, Waldo - Protecting Property Rights.

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Maria Morton,Realtor© Call 816-560-3758.  Google Maria

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Maria Morton of Better Homes & Gardens Real Estate is a licensed Real Estate Agent in KS & MO. 816-560-3758 Mobile 816-410-5499 Office 816-410-6302 eFax 435 Nichols Road Ste. 300 Kansas City, MO 64112   Maria Morton Copyright © 2008-2014 


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Erv Fleishman
Realty Associates - Boca Raton, FL
Luxury Prop Specialist Realty Associates

Taxes, taxes, taxes. Renting your home has implications as to the tax basis and should be considered.

Jan 26, 2012 02:49 PM #1
Maria Morton
BHG Real Estate - Kansas City Homes - Kansas City, MO
Kansas City Real Estate 816-560-3758

That's why it's so important to consult with your tax advisor, accountant and realtor before starting out, Erv. That way everyone is on the same page.

Jan 26, 2012 03:12 PM #2
The Friendly Home Team
Realty Pro Oregon, LLC - Beaverton, OR
Brokers - Oregon / SW Washington Real Estate

There is a report about a national sales tax going in to affect on January 1st, 2013. This report is false according to NAR. But, your information about selling a home and the costs are correct! It is important for sellers to know exactly what costs are involved prior to selling so there are no surprises. Ask for a estimated HUD from your title officer can be a huge eye opener. 


Jan 27, 2012 05:53 AM #3
Anja Kerstens
Coldwell Banker Residential Brokerage - Morgan Hill, CA
GRI, CDPE, CHS, ASP, Selling Silicon Valley Real

I just found out that in our area here in the Silicon Valley sellers will have to pay a new tax to go to the California Fire Department for people who live in certain fire danger areas; State Responsibility Area as they call it.


Jan 27, 2012 01:56 PM #4
Dale Baker
Baker Energy Audits and Commercial Properties Inspections - Claremont, NH
New Hampshire Relocation Real Estate Information

Howdy and evening Maria

Maria my friend, this here sure is mighty fine Tax info to get out to folks.

Have a good one
Dale in New Hampshire

Jan 29, 2012 02:55 PM #5
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Maria, nice to know that there are still some ways around paying those higher taxes.  That last scenario sounds almost too good to be true.

Jan 30, 2012 03:10 PM #6
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Kansas City Real Estate 816-560-3758
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