I want to remind sellers about the home sale exclusion tax break in the IRS Code. If you have owned a home and used it as a primary
residence for 24 months out of the last 60 months, and then you sell it, all the gain is tax free. So, if you made a $35,000 profit, you would
NOT have to pay the $9,450 capital gain tax like you would have to on any other income. What if you are a seller with a primary residence and need to sell but have lived there for less than two years? Can you still get this tax credit? If you had to move out of a house before the 2 years were up because of an unforeseen circumstance, then you can still get a partial tax break through a loop hole in the home exclusion tax break in the IRA Code. What qualifies as an unforeseen circumstance? An unforeseen circumstance would be a natural disaster, a change in employment, becoming self-employed, divorce or legal separation, and even multiple births from the same pregnancy. So even if you are promoted or demoted at work, you can sell your house and take a partial tax break even if you have not lived in your primary residence for two years. The same holds true if you start or discontinue self-employment. So if your home has increased in value and you have lived there for less than two years, you could start up a tiny home based business just to qualify for this home sale exclusion tax break. It’s that easy! Now you don’t have to pay all that capital gains tax. With any financial decision, you should consult your accountant. This information is meant as a guide to help you in your real estate decisions. We have many highly trained Realtors at RREA that are ready to help you with all of your real estate needs. Call today to get started – 281.288.3500.
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