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Tax Exclusions For Home Sales

By
Industry Observer with Retired

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 

Posted by

Roy Kelley, Retired, Former Associate Broker, RE/MAX Realty Group

Gaithersburg, Maryland  

Mike Schneider
10 YRS with Active Rain ! - Lake in the Hills, IL
ABR, CDPE, SFR

Thanks Roy...its good to be reminded of the "positive side" of selling these days. Thank you for sharing. best wishes for '12.

Mike

Jan 29, 2012 11:32 PM
Roy Kelley
Retired - Gaithersburg, MD

Good Monday morning!  Do not fail to remind your contacts of the tax benefits of real estate ownership.

Have an outstanding week.  Always have your camera in hand to capture those special moments as you are out and about in your community and your travels.

Jan 29, 2012 11:35 PM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Roy ...I think a lot of people forget about these deductions You do a great job keeping us all informed!

Have a great day!

Jan 30, 2012 12:02 AM
Keith Gilkey
Re/Max Chesapeake - Elkton, MD
410-920-7214, Re/Max Chesapeake

Roy, Great reminder and fantastic photo! Have a great day!

Jan 30, 2012 12:08 AM
Anita Clark
Coldwell Banker Access Realty ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

Roy: This is the type of information that is perfect to pass on to consumers, especially those who are undecided about jumping into the market.

Jan 30, 2012 12:26 AM
Roy Kelley
Retired - Gaithersburg, MD

Good Monday morning.  It is always good to recieve your comments. 

Have an outstanding week.

Jan 30, 2012 12:50 AM
John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Roy great information for homeowners and your timing is perfect!  Happy Monday.

Jan 30, 2012 02:11 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Very nicely written reminder, Roy. I'm sure you helped a lot of people by putting this out there.

Jan 30, 2012 03:09 AM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Roy, another great reason that buying real estate is a good, long term investment - no matter the economy.  

Jan 30, 2012 03:46 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate (435) 632-9374 - St. George, UT
St. George Utah Area Residential Sales Agent

Great news for those who qualify for the tax break Roy! Have a great week!

Jan 30, 2012 03:50 AM
Tony & Darcy Cannon
Aubrey and Associates Realty - Layton, UT
The C Team

Roy, That is a great reminder!  I love the photograph of the flower as well!  Have a great Monday!

Jan 30, 2012 04:06 AM
Roy Kelley
Retired - Gaithersburg, MD

Good Monday morning to all.  I appreciate your comments and hope you have an outstanding week.

Always have your camera in hand to capture those special moments as you are out and about in your community and your travels.

Jan 30, 2012 04:13 AM
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

Roy,  Many folks don't know about the $250k and $500k tax exemption.  Great informative post to let folks know of the advantages of selling your home.

Jan 30, 2012 04:16 AM
Jennifer Chiongbian
Specializing in all types of Manhattan apts & townhouses - Manhattan, NY
Real Estate Broker - NYC

It's always great when you can tell your clients about these great tax advantages such as capital gains and 1031 echanges, etc. that can help save them some money.  It just adds to your value when you know these exemptions.

Jan 30, 2012 05:16 AM
William Johnson
Retired - La Jolla, CA
Retired

Hi Roy, Always valuable information and it is also the area of the tax code ( exemption rule ) that is going to be challenged soon in the Senate. I expect the House not to pass it at least until there is a complete revision of the tax code that also won't happen until after the election. But for sure it is the law now and people can still take advantage. 

Jan 30, 2012 01:36 PM
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

Roy, This is a great reminder for some folks. I hate trying to figure out all of this tax information mumbo jumbo, but it's better to know than and save some big dollars.

Have an awesome day!

Jan 30, 2012 11:12 PM
Roy Kelley
Retired - Gaithersburg, MD

Good Tuesday morning to all.  Many home owners do not know about the exclusion benefits when you sell a home.  It is a good idea to remind them of the tax advantages of home ownership.  I always refer them to their tax advisor for specific advice.

Be sure to  have your camera in hand to capture those special moments as you are out and about in your community and your travels.

Jan 31, 2012 12:26 AM
Roy Kelley
Retired - Gaithersburg, MD

I hope you have enjoyed a most productive month.

Have an outstanding week!

May 31, 2016 12:18 AM
Roy Kelley
Retired - Gaithersburg, MD

Good Tuesday morning to all. Have a most productive week as we face the challenges of the new year.

Jan 17, 2017 09:32 AM
Roy Kelley
Retired - Gaithersburg, MD

It is sometimes good to revisit old blogs and reblogs. We might even find some good ideas for new blogs.

Jan 29, 2019 01:22 PM