Most of my clients profit from selling their homes, and just before signing the doted line, I'm often asked about capital gains taxes.
When you sell your primary residence, you are not taxed on your profits if:
- You have have lived in the home for two out of the last five years.
- Your gain does not exceed $250,000 as a single taxpayer or $500,000 as a married couple filing jointly.
Gains above these limits are taxed at the current rate of 15% for higher income tax payers and 5% for lower income tax payers.
In 2008 the rate will continue for higher income taxpayers; while the 5% lower income rate will drop to 0% for the 2008 tax year only. On January 1, 2009, the long term capital gains tax will once again be 15% and 5% through 2010.
Homeowners can use this tax free provision every two years. As set forth in the American Job Creation Act of 2004, properties converted from a 1031 exchange property into a primary residence must be held and used as a primary residence for at least five years to qualify for the tax exemption.
And last but not least, I would consult a "tax accountant" for more detailed information regarding your particular situation.
For professional advise on all aspects of buying or selling Real Estate, please contact me Richard Recuset at-786-287-9272 -email: RecusetRealEstate@Gmail.com
The Recuset Group
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