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Tax question regarding home sale
Posted on 10/3/24 at 7:04 am
Posted on 10/3/24 at 7:04 am
Single man looking to downsize from my current residence, which I have lived in for 19+ years. I know Zillow is not a reliable resource and gives just a general baseline but according to them I will realize sizable estimated net proceeds from the home sale (just north of $1m) after the estimated remaining mortgage and closing costs are factored in. I know I get a one time capital gains exemption of $250K and I will be taxed at my current capital gains rate on the remaining amount however I was told by a friend in the mortgage industry that if I purchase another (smaller, less expensive) home up with the remaining proceeds from the home sale within either 18 or 24 months I can avoid paying capital gains taxes. Is this correct or is he oversimplifying? I have yet speak with my financial advisor and am only in the beginning stages of planning a potential move but I am seriously kicking around the idea and was wondering about the tax ramifications and my options. Thanks in advance for your help!
5
Posted on 10/3/24 at 7:48 am to AZBadgerFan
I thought it was anything over $500k you may have to pay capital gains on.
Posted on 10/3/24 at 7:49 am to AZBadgerFan
Your friend is a moron.
You have it free up to the 250, Get to subtract what ya paid for it of course when factoring your gain. (This is for every house you occupy for 2+ years, not just a 1 time deal.)
Congrats on quite the windfall!
People will 1031 exchange but that only applies to investment property to investment property.
You have it free up to the 250, Get to subtract what ya paid for it of course when factoring your gain. (This is for every house you occupy for 2+ years, not just a 1 time deal.)
Congrats on quite the windfall!
People will 1031 exchange but that only applies to investment property to investment property.
Posted on 10/3/24 at 7:49 am to Rize
quote:
I thought it was anything over $500k you may have to pay capital gains on.
If you're married. 250+250
Posted on 10/3/24 at 8:30 am to Billy Blanks
quote:
If you're married. 250+250
Yeah I forgot about that part
Posted on 10/3/24 at 8:40 am to AZBadgerFan
quote:
(just north of $1m)
The increase from what you paid and are selling it for is 1m in 19yrs?
Good god
Posted on 10/3/24 at 9:09 am to AZBadgerFan
Did you make any improvements? Improvements increase your basis which directly offset your gain.
if there are any defects that may be decreasing your market value (roof, AC, etc), you may consider making the improvement now, especially if you were to get back more than you put in. Some of these improvements may even be eligible for a tax credit.
Your friend seems to be talking about a 1031 exchange, I don’t think that is applicable here.
if there are any defects that may be decreasing your market value (roof, AC, etc), you may consider making the improvement now, especially if you were to get back more than you put in. Some of these improvements may even be eligible for a tax credit.
Your friend seems to be talking about a 1031 exchange, I don’t think that is applicable here.
Posted on 10/3/24 at 1:27 pm to Lsut81
quote:
The increase from what you paid and are selling it for is 1m in 19yrs?
The Scottsdale market has been hot the past decade or so, redhot the past five. Paid $845k in 2005 and comps in the neighborhood and Zillow has it ranging from $ 1.5-1.7m.
Posted on 10/3/24 at 1:28 pm to Billy Blanks
Yeah, I knew he was off and was misinformed. Thanks much for the clarification!
Posted on 10/3/24 at 4:29 pm to AZBadgerFan
The nontaxable rollover of your gain provision was the old law. Congress repealed that provision in the early 90s and replaced it with the 250k/500k exclusion. They also repeated an exclusion provision of 125k for people over a certain age, I believe 55.
ETA: Had Congress made those dollar amounts subject to yearly inflation adjustments, those amounts would be at least double what they were when the law was enacted.
ETA: Had Congress made those dollar amounts subject to yearly inflation adjustments, those amounts would be at least double what they were when the law was enacted.
This post was edited on 10/3/24 at 5:06 pm
Posted on 10/3/24 at 8:14 pm to AZBadgerFan
quote:
The Scottsdale market has been hot the past decade or so, redhot the past five. Paid $845k in 2005 and comps in the neighborhood and Zillow has it ranging from $ 1.5-1.7m.
Need to increase the min wage to $100 per hour so that the people earning minimum wage can afford to own a house.
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