Are You Thinking About Selling Your Home? Here Are Your Capital Gains Tax Concerns

If you are considering selling your home, chances are you are thrilled by its potential profits yet apprehensive about how much of them you may actually keep post-tax. That is perfectly understandable; no one wants their hard-earned equity disappear into a tax bill!

Your most pressing tax concern likely comes in the form of capital gains taxation, which applies when selling something--like real estate--for more than you paid initially. But there's good news: not every homeowner needs to pay this charge.

Understanding Capital Gains Exemptions

If the home you're selling is your primary residence, you could qualify for an important tax break from the IRS. They allow for exemption of expenses related to moving.

Up to $250,000 of profit if you're single

Subtract up to $500,000 when filing jointly as married couple.

That means if your gain falls within these boundaries, selling your home tax-free could be possible.

To qualify, the property must have been your primary residence for at least two of the last five years prior to selling - this doesn't have to be consecutive years, just two total within that five year window.

How Home Improvements Can Reduce Taxable Gain

Smart planning pays dividends here: every improvement to your home over time--be it new roof, remodelled kitchen, upgraded HVAC unit or energy efficient windows--will increase its cost basis (essentially what has been invested into the property).

As long as you keep records of these improvements, they could reduce your taxable profit at sale time and save thousands in taxes.

Plan Ahead and Save More

Selling a home can be an enormous financial move, so understanding capital gains taxes is critical in planning ahead and saving more money when selling one. Every situation differs; your timing, profit amount and even local market trends in Corona or Inland Empire play their own unique role.

Before listing your home for sale, it can be helpful to have a short strategy session with an experienced local expert who understands how to maximize profits while reducing taxes.

Let's Protect Your Equity

Are You Selling in Corona or the Inland Empire? Together we'll discuss a strategy to navigate the market, understand your tax options and ensure as much of your hard-earned equity is preserved as possible.

Contact Diana Renee Homes now and start planning your move--with confidence and clarity!