If you are considering selling your home, you should also be thinking about how to best make that profit work for you. As you are probably already aware, housing prices are increasing at record pace. Now, more than ever, is the time to put a plan in place to maximize that equity growth you’ve realized in the last few years.
Did you know that as a married couple, you can profit up to $500,000 at time of sale, or $250,000 as a single person, and pay no taxes on that profit?* Did you also know that anything over and above this aforementioned profit will be subject to capital gains tax?* This rule only applies if you have lived in the property as your primary residence within 2 of the last 5 years*. Profit is what is left once all your expenses are paid (closing costs, commissions, etc.) as well as deducting out any capital improvements you’ve made on the home during your ownership. With record increased values in real estate for the past several years, we are seeing, now more than ever, more and more homeowners reach or exceed that threshold of profit on their homes.
If you’ve been considering a move, it’s important to evaluate and monitor what your profit may be in order to time your sale to the best of your advantage. Avoiding paying a capital gains tax, if at all possible, lets you keep more money in your pocket either for a re-investment or to simply set aside for a rainy day.
If you have owned your home for many years and would need to pay some capital gains tax at time of sale, there may be other tax benefits that could work to your advantage, such as transferring your property tax basis (if you are 55 or older and moving within the state of California)*. Don’t let the capital gains tax stifle your move if you are amongst the lucky, with an abundance of equity in your home, but if I can help you retain as much of your money as possible, that is my goal.
Please call me at 619-944-2798 or email me at [email protected] for a no-pressure evaluation of your property value to best assess your plan. I would welcome the opportunity to be of service to you!
* Megan Beauvais is not a tax advisor and strongly suggests you consult with a qualified tax specialist and/or tax attorney to verify this information and whether these rules apply to you.