How can I take advantage of tax-free capital gain?
When you sell your property for more than what you paid for it, you have a "capital gain" that could be subject to the capital gains tax. The current tax rate for capital gains is anywhere from 0% to 20%, depending on your level of income. If you've lived in your house as your primary residence for two full years out of the past five years, you may be able to sell your house without paying any capital gains tax. The primary residence capital gains tax exclusion is $250,000 for single taxpayers, and $500,000 for married couples filing a joint tax return. In order to qualify for this exclusion, you'd need to sell your house within three years of moving out. Otherwise, you could miss out on a significant amount of tax-free money. For more details, see my article called, How to Get the Primary Residence Capital Gains Tax Exclusion. Also, please reference IRS publication 523 and speak to a CPA for more details.
What's my estimated rate of return on investment?
If you're going to turn the house into an investment, it would be smart to estimate your rate of return. Consider:
- How much will you charge for rent?
- What will be your monthly expenses (including maintenance)?
- What's your holding period, and when will you sell the investment?
- What will be the sales price, the costs of sale, and the net proceeds from the sale?
- What's your annual rate of return, and how does this compare with other investment opportunities?
Contact me for further information or if you’d like me to run some numbers for your specific scenario.
Broker
NMLS: 241125
EstaR Mortgage
Mylender@MyEstaRM.com
(510) 463-1003
2413 Webb Avenue, Suite E,
Alameda, California 94501
Corporate NMLS: 1547521
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