Tax Implications of Selling Your Home


I recently had a conversation with a client who is in the market to sell their existing property and purchase a new home.  Her main concern, she said, was the capital gains tax she would incur when her house sold.  Although the capital gains tax on the sale of your principal residence was modified during the Clinton years, she was not aware of the change. 

Not long after that, I encountered another seller who was concerned about the tax implications of selling his current home.  As a result of those conversations, I think it is a good time to go over those changes for folks considering selling their existing home.

The guidelines for the sale of your primary residence no longer creates a tax burden for the seller.  As long as you make no more than $250,000 profit on the sale as an individual owner or $500,000 profit as a married couple and have lived in that property for a minimum of two of the past five years, your profit is absolutely and completely tax free. 

In addition, you are allowed the tax-free sale of any number of homes as long as you meet these guidelines.  For those who want or need to move every few years, this is important information to have. 

Please contact your tax preparer for further details.   

 

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