Tax Exclusions For Home Sales
The weekend Housing Counsel column, by Benny L. Kass, in The Washington Post provides some good tax information for home owners.
“Selling your home (including condo or co-op) in today’s market is not easy, but when you are successful, you may be pleasantly surprised by the favorable tax laws.
In general, if you are married and meet two legal tests, you can exclude up to $500,000 of the profit you have made. If you are not married or file a separate tax return, the exclusion is reduced to $250,000.”
A lesson on real estate deductions
“The two tests are ownership and use. You must have owned and used the property for at least two out of five years before it is sold. If you are married and file a joint return, one spouse must meet the ownership and use tests to exclude up to $250,000 of the gain. However, if either of you meet the ownership test and both meet the use test, you can exclude the full $500,000.” – Benny L. Kass
This article is a very good reminder that the best tax driven real estate investment may be the personal residence. Buying smart, making smart improvements to raise the value and selling after two years is wonderful way to obtain a tax free profit. And, you can do this every two years. Some are able to make more by buying and selling their owner occupant homes than they make in salary on their regular job.
Lender owned foreclosures and homes that are being offered in distress situations provide many purchase opportunities involving properties with upward potential.
Be sure to have your camera in hand when you are out and about in your community to capture those special moments.
Lewis Ginter Botanical Garden IMG_3474
Photograph by Roy Kelley
Roy and Dolores Kelley Photographs
Comments(26)