Not everyone is aware of the newer laws regarding capital gains when it comes to selling your home for a profit. You may be ready to downsize or invest in a home in Yuma instead of the stock market or other entity. Whatever your reason for selling, you need to know what benefits you can realize. The last thing you want to lose in a real estate transaction is a tax advantage.
Needless to say anything tax related may have complications and restrictions. If you don't fully understand all of the laws, be sure to hire a well-schooled and experienced real estate tax accountant. Just to refresh your memory or to educate you if you don't know the basics; married couples may exclude $500,000 dollars of profit on the sale of a home, and singles or married people filing separately are allowed a $250,000 exclusion on their profit. There are no limits as to the number of times you can claim these exclusions, but there are some restrictions you need to pay close attention to. In the past you could use the exclusion only once, but now you have unlimited access.
In other words you can keep buying and selling homes for a profit within the monetary guidelines as many times as you choose. The two caveats are: ? You have to own and live in the house for two years out of five before you sell it. That means that during the two years it serves as your main home.
In the case of those that are married, only one of them needs to live in the house. There are more specific rules that apply in the case of legal separations and divorce. These are best taken up with your accountant or the IRS.
? As mentioned, the parties must inhabit the house for at least two years, but this isn't always possible due to certain conditions. The IRS calls these safe harbors. Some of them pertain to health, job changes, and the catchall phrase "unforeseen circumstances". These or course can confuse anyone, so once again you want to make sure you're advised by an expert. In fact they're so poorly explained that even some IRS personnel don't fully understand them.
Even if you don't qualify for one of the safe harbor exclusions, don't give up. You may be able to prove to the IRS that you do indeed qualify. It may not be easy, but you want to do everything possible to take advantage of these tax laws meant to help you.
By the way, primary residences may be single family homes, condominiums, or town homes. They must have at a minimum a place to sleep, cooking facilities, and a toilet. The main thing to remember is to keep every receipt for anything pertaining to the home. Real estate commissions that you pay, improvements, legal fees, title search cost, and areas you fix up, may all qualify as tax write offs and make your profit less.a plus for you.
The IRS requires proof, so hang on to everything you even think may be important. If you work these laws to the best advantage you can keep buying and selling homes in Yuma and generate a secure retirement nest egg.
Click here to get a free copy of Jeff Nelson's, "7 Common Home Buying Mistakes," a 10-page report that describes the mistakes to avoid when purchasing your new home in Yuma, Arizona.