Capital Gain not necessarily your loss.....

I am asked frequently by sellers what the Capital Gains tax ramifications would be if they sold their homes. I want to clear up a few misconceptions.

Let me start by saying I am not an accountant or Tax attorney (my schedule would be CRAZY if I were!) and you should consult one or the other for definitive information.

If you have been in your home for two years or more, it is your primary residence (meaning you live there at least 6 months of the year), and are a single individual, you can deduct up to $250,000 of profit on the sale of your home. If you are a married couple, that number increases to $500,000.

The famed and now mythical "property flippers" were finding that a quick flip didn't necessarily add up when it came time to pay Uncle Sam, unless they directed the profit of the sale into a "1031 Exchange", whereby they could roll that profit into another Like and Kind real estate investment thus DEFERRING the Capital Gains tax as long as the new property was a primary residence and met the other restrictions of the Exchange. Whew! That was a long sentence!

I am also asked what percentage of profit would be owed if there was a tax. I have no idea. There are so many variables to that, I wouldn't begin to offer advice or speculate.

With the new Homestead legislation in this state, the new revisions to the tax code and the amazing bargains to be had for buyers, it is time for sellers to drop the fear factor and sell. We most likely won't see the type of market we had in 2004 and 2005 so it's time to be logical and reasonable.

I've got some "For Sale" signs available when you're ready.