Saving your client money. This is a Generous tax code exclusive forsellers.
A great tip to give your clients!
Most of you know the the home exclusion is one of the most gererous tax breaks in the IRS code. Again I just want to remind you that if you or your client has owned his home and used it for 24 months out of the 60 months then when they sell it all the gain is tax free. You would not have to pay property gains on it!
O.k here is the tip, Most people including me don't realize how easy it is to use the exclusion even if you don't meet this 2 year test. Here is the loop hole....If you have to move out of the house before the 2 years were up because of an unforeseen circumstance, you still can get a partial tax break.
So what is a unforeseen circumstance? Unforeseen circumstance are defined very liberally. They can include natural disasters, a change in employment, becoming self employed, divorce or legal seperation, and oddly enough, multiple births from the ame pregnancy.
Here's how it works. Say you were promoted or demoted, at work.
This is a change of employment, so you can sell your home and take a partial break even if you don't the satisfy two year test. The same is true if you change, start or discontinue a business.
A way you can apply for the loophole. Say you want to move from a property that has gained value , you have lived there for two years, but don't want to pay the thousand of ten thousands of dollars in capital gain tax.
Well before selling you start a simple at home business. Just do a google search of subjects and you will get hundreds of simple , no cost examples to start.
Assuming you sell the house after living in it for a year, you would half of the maximum tax break because one year you lived in the home half of the amount of time for the whole tax break. You cand your spouse could exclude up to $250,000 of any profit on the sale and NOT pay the capital gains tax. A single filer could exclude up to $125,000.
WOW! This is huge.... How many people would love to know this!
This should increase your business because more people would want to sell their homes quicker!
This information came from Southeast mortgage and for more information on this call him today! 404-312-3459.
I love great tips on Real Estate and wanted to pass this along to all my active rainers.
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