Homes are one of our largest assets and with property values skyrocketing, many times the appreciated value of the home has increased dramatically when you are ready to sell. While those profits can be beneficial to the seller, it also means you may be required to pay additional tax. When selling your primary home if you have a capital gain, you may qualify to exclude up to $500,000 of that gain from your income if you file a joint return with your spouse or $250,000 of that gain if you file individually.
To qualify for the exclusion, the home you are selling must have been your primary residence for at least 2 of the last 5 years prior to the sale. The exemption is only allowable once every 2 years – however, there is no limit on how many times you can use the exclusion should you qualify again in the future. If you own more than one home, a key factor is determining which is the primary residence. Vacation properties or investment properties do not qualify – you must live in the property as your primary residence for at least 2 full years. Additional limitations may apply to the exclusion as well – for example, if you turn a rental property into a primary residence or have inherited a property there may be additional restrictions or requirements. With the right real estate team on your side you can easily determine how the primary residence capital gains exclusion may apply to you.
Working with a member of Team Athey you have a knowledgeable partner to help you every step of the way as you navigate the sale of your home. We have your best interest at heart and can help you to determine if you qualify for the Primary Residence Capital Gains Exclusion. Together, we can secure the most value with the sale of your home and help to simplify the process so you understand and benefit from any exclusions you qualify for.