Don't Lose Your Capital Gains Exclusion, It Could Cost You

Currently I’m working with a couple selling a home that is rented to their son and soon to be daughter-in-law. This was their primary residence for 14 years until they purchased another home 2 years ago. Their accountant asked if they had planned on taking the principal residences capital gain exclusion.  My client said they would like to but didn’t know what is was or how it worked. 

The requirement is that they must have owned and used the home for two out of the last five years (730 days), but that didn’t mean 2 years concurrently.  For my clients, it means the home needs to be ready to sell; fresh paint, popcorn on ceilings removed, landscaping upgraded, priced correctly, sold and closed within six months."

The motivation for the seller was simple...minimizing or eliminating the unnecessary payment of taxes.  Their gain in the home should be around $100,000; not qualifying for the exclusion would cost them $15,000 in long term capital gains tax.  That is a lot of money to leave on the table for the government to keep and decide how it should be spent.

Getting your home sold for the most money is something most good agents strive for; protecting your best interests is another.  I help people understand the tax advantages, financing alternatives and investment aspects of homeownership.

Respectfully,

Debbie York  SFR, GRI, CNS
Coldwell Banker
Certified Distressed Property Expert

760-505-6474

dyork@coldwellbanker.comNorthCountyHomesInfo.com

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