Princeton Town Topics – Let’s Talk Real Estate – August 23, 2023
NAVIGATING CAPITAL GAIN TAXES WHEN SELLING YOUR HOME
Capital gains refer to the profits earned from the sale of an asset, including real estate. While many homeowners might assume that the entire sale amount is theirs to keep, it’s crucial to consider the potential tax obligations that might arise from this transaction.
In the United States, homeowners can often exclude a significant portion of their capital gains from the sale of their primary residence. Under the current tax laws, individuals can exclude up to $250,000 of capital gains from their taxable income, while married couples filing jointly can exclude up to $500,000, provided certain eligibility criteria are met.
However, if the gains exceed these thresholds or if the property wasn’t used as a primary residence for at least two out of the past five years, some capital gain tax might be due. Understanding the nuances of these regulations, as well as potential exemptions for unforeseen circumstances, can help homeowners make informed decisions when selling their homes.
Before embarking on selling your home, it’s advisable to familiarize yourself with the capital gain tax implications. Seeking advice from tax professionals can help you navigate this complex landscape and ensure you’re well-prepared to make the most of your home sale while staying compliant with tax regulations.
