MLSvideo.com
Newsletter
Due to my past experience in the accounting profession I often get asked questions related
to IRS tax issues concerning my clients real estate transactions. A frequently asked question
is regarding the capital gains that is taxable from the profit obtained when selling your home.
The following is the current IRS ruling on this matter.
Generally, you have made a profit if the selling price of your home
is greater than the price you paid to purchase the home. That profit,
considered a capital gain, is usually subject to income tax. However,
under certain circumstances the law allows you to exclude all or part of
that gain from your income - that is, you may not have to pay tax on the
profit. Individuals may be able to exclude up to $250,000 of capital
gain on the sale of their home, and married taxpayers filing joint
returns may be able to exclude up to $500,000. The exclusion may be
claimed each time that you sell your main home, but generally no more
often than once every two years. To qualify, you must meet both the
ownership and use tests.
Ownership Test: During the 5-year period
ending on the date of the sale, you must have owned the home for at
least 2 years.
Use Test: During the 5-year period ending on the
date of the sale, you must have lived in the home as your main home at
least 2 years.
If you and your spouse file a joint return and both meet
the use test, you normally will be able to claim the exclusion for
married couples even if only one of you meets the ownership test. If you
do not meet these tests, you may still be allowed to exclude a reduced
amount of the gain realized on the sale of your home. But you must have
sold the home for other specific reasons such as serious health issues,
a change in your place of employment, or certain unforeseen
circumstances such as a divorce or legal separation, natural or man-made
disasters resulting in a casualty to your home, or an involuntary
conversion of your home.
Should you
have any residential real estate needs, please do not hesitate to
contact me at 425-213-6256 or michelle@mlsvideo.com.
MLSvideo.com offices are in downtown Bellevue at
10900 NE 8th Street, Suite 900, Bellevue, WA 98004-4448.
Have a great day and remember "The highest compliment our clients can
give us is the referral of their friends, family and business
associates. Thank you for your trust."
Sincerely,
MLSvideo.com
Associate Broker
