Capital Gains – How it Can Impact Your Home Sale.

Capital Gains – How it Can Impact Your Home Sale.

For those who sold their home this year, it’s important to understand how selling your home may impact your tax returns, now that tax season is upon us. The following information explains how capital gains work for those who have recently sold a home. For those of you that are unaware of what capital gains are, its simply profit made from a capital asset such as stock, bond, or in our case, real estate.

If you sell your primary residence, you may be able to exclude up to $250,000 of gain – $500,000 for married couples – from your federal tax return. To claim the exclusion, the IRS says your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale.

There are a few catches: You also must not have excluded gain on another home sold during the two years before the current sale. However, special rules apply for members of the armed, uniformed and foreign services and their families in calculating the 5-year period.

If you do not meet the ownership and use tests, you may use a reduced maximum exclusion amount. But only if you sold your home due to health, a change in place of employment, or unforeseen circumstances.

An extra perk? If you can exclude all the gain from the sale of your home, you do not report it on your federal tax return. If you cannot exclude all the gain, or you choose not to, you must use Schedule D of Form 1040, Capital Gains or Losses, to report the total gain and claim the exclusion you qualify for.

How about for those with more than one home?

You can exclude the gain only from the sale of your main residence. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most often.

The Green Team home base is in Warwick, but our client’s properties expand all over New York and New Jersey. I have seen a large raise in  homes for sale in Warwick, Florida, and most other places in Orange County which is why I am passing this information on to you reader! If you have any questions on capital gains, don’t hesitate to call or stop by.

6 Tips to Sell Your Home Fast & For Maximum Profit

6 Tips to Sell Your Home Fast & For Maximum Profit

Tips to Sell Your Home

  1. It’s inconvenient; having your house ready to show at a moment’s notice is never easy, as a matter of fact, it is downright inconvenient and if you have kids and a pet it’s almost impossible! But here is the thing, you need to have it ready if you want to sell it.  You never get a second chance to make a first impression and you will get requests for a showing with hardly any advanced notice.  Tip: Making a plan with all family members of who gets what room ready!
  1. A clean decluttered home sells!  The words I always hear from buyers, a move-in ready (no projects, see #3) bright, clean, fresh space with lots of storage.  It is your job as the seller to show off your home’s “bones” and not your stuff.  This also means depersonalize your home.  The buyers need to envision themselves in your home, not you.  You are moving right, declutter, and pack it away.  Tip:  leave all closets ½ empty.
  1. Repairs left undone will cost you in the end.  Buyers will walk thru your home and see unfinished projects and start adding them up which means they are either not going to be interested or are going to offer much less.  They most likely will make the assumption that if you didn’t do these repairs, what other “unseen” issues might be lurking.  Tip:  Ask your realtor to give feedback on what they notice that needs to be done.  You can also hire a home inspector to give you what some call a pre-listing inspection.
  1. Homes priced right sell!  If your home is priced too high, it won’t get much traffic and you are helping to sell the other homes in the neighborhood that are priced for less.  The longer your home sits on the market the fewer buyers will look at it.  Tip:  Price it right the first time.
  1. Buyers love to negotiate after the home inspection is done.  Get ready, buyers will try and get more for their money and sometimes even nickel and dime you.  This is where your realtors negotiating skills are key.  Tip:  If you take care of #3 there won’t be much to negotiate.
  1. If you decide to stay home when your showings are happening, be prepared to be grilled.  Buyers love to ask homeowners tons of questions, especially why are you moving?  They are looking to see if you “need” to move, which means they can offer you less because you are desperate!  Tip:  Go out even if it’s just for a walk around the block.