As a long time taxpayer I love discovering new ways to save money on income taxes.
One of the best deal going to date is the up to $500,000 EXCLUSION ON THE GAIN (the difference between what you paid to buy the property and what you sold it for) you make on the sale is tax-free, not the sale price, of your principal residence. It's up to $500,000 for married taxpayers filing jointly or $250,000 for single taxpayers.
Basically to qualify for this huge tax savings you only have to have lived in a house that qualified as your principal residence for any 2 of the past 5 years.
One quirk to this regulation I was not aware of is that under certain circumstances you can qualify for 1/2 the gain or up to $250,000 for married taxpayers filing jointly or $125,000 for single folks, if you lived in the house for as little as one year.
The circumstances are:
Since most of us qualify as self-employed, creative minds should be able to come up any number of valid reason that would qualify you for that gain.
You should advise your clients to consult a qualified tax professional for the best advice but nothing wrong with making them aware of potential huge benefits for them to look into.
I had a seller recently that was under the mistaken impression he had to sell his home within 2 years after moving out. He had it listed with several other Realtors before he called me and was very concerned about the 2 years which was elapsing soon.
I advised him that he actually had just over 3 years left since he had gotten laid off and had to take a job in another city 2 years before. He verified that with his CPA and was very relieved to find that it was true.
I listed the house and we sold it about 2 months later; he was a very relived and happy camper because; a. we got his house sold and b. he was able to take advantage of some tax free profits on it.
Jim Lee , REALTOR®, Certified Residential Specialist (CRS)
RE/MAX By The Bay
150 Mirona Road, Portsmouth, NH 03801 Phone: (603) 431-1111 x3801
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