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#HomeSale #CapitalGainsTax #SaturdaySchool So this one is not related to the stock market or a retirement savings account, but with the housing market being insane it felt like it still tied into the overarching idea of taxes and personal finance. WHO should be aware of Capital Gains Tax for Home Sale? - All home owners interested in selling their home ... the market is crazy and your house is probably worth more - Just be sure to set some of the profit aside for taxes, as Uncle Sam always comes to collect ... best it is not with interest and penalties WHAT do you need to know about Capital Gains Tax for Home Sale? - First, it is very important to know how this home is classified - is this your primary residency or is it an investment or rental property (this POST we will assume primary residence status) - Similar to the stock market there is Short Term Capital Gains Tax which is your income tax bracket and then Long Term Capital Gains Tax which is 0/15%/20% based on income - If certain criteria are met - "You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you are single and $500,000 if married filing jointly." - Investopedia WHERE can I learn more about Home Sale Capital Gains Tax Exemptions? - This is probably not something you want to make mistakes on or do yourself, I would strongly advise you to have a conversation w/ a tax specialist or CPA WHEN should I be thinking about Capital Gains Tax Home Sale? - If you are thinking about selling your home, you should be considering these factors before listing your home for sale - If you have lived in your home for less than 1 year, could waiting a few months be a big difference between short or long term capital gains tax - If you have lived in your home for under 2 years, could waiting a few months allow you to qualify for the tax exemption of $250k for single or $500 k for married WHY should I pay attention to Home Sale Capital Gains Tax? - Ignoring it will only lead to an unpleasant surprise come Tax Day the following year and with large amounts of money you probably want to set that aside ahead of time - Differences between short vs long or qualifying for or not qualifying for the tax exemption can lead to serious difference in the amount of money you get to hold on to - If you have capital losses that you were thinking about realizing, you could time this during the sale of your home to offset some of the taxable income HOW do I qualify for Home Sale Capital Gains Tax Exemption? - Have lived in home as primary residence for 2 non-consecutive years over 5 year period - Have not used this exclusion before in the past 2 years - Again, consider speaking w/ tax specialist or CPA as tax codes change and it is best this is done well Resource: Investopedia / Video: https://www.youtube.com/watch?v=2MpxOvDQpwY P.S.: Anyone out there big into real estate either for flipping, rental, or commercial? #TaxEfficiency #TaxTail
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