Capital Gains Tax On Homes In Salt Lake City, Utah
A client called the other day concerning paying a capital gains tax on a Salt Lake Home. My clients had heard from someone that they would really need a lawyer to help them minimize the “horrendous” amount of IRS capital gains taxes they were going to have to pay on the sale of their parent’s home. Since they were not going to “roll it over into the purchase of another home”, they were naturally concerned.
So, putting on my trusty Realtor hat and speaking in my professional voice (I took the Texas accent out and avoided the use of “Y’all”), I told them not to worry, the information gleaned from their source, at least on taxes, was fortunately incorrect.
Since May 7, 1997 when the Taxpayer Relief Act became law, the IRS home sale taxes eased for most residential tax payers. Gone are the “roll over” days where if you did not purchase a home within 18 months you were taxed on the “ capital gain” you made on your home sale.
The Taxpayer Relief Act of 1997 allows a homeowner (or owners) a capital gains tax exemption of up to $250,000 for individual or up to $500,000 for a couple on the sale of a primary residence home.
So, if you bought a home for$ 200,000, then sold it 15 years later for $400,000, your profit from the home would be $200,000 minus any improvement costs to the house (so keep those receipts for everything you do to improve your home…they come in handy). You can bank that money and rent if you want to, cause Uncle Sam can’t tax it.
Now, there are, as there Always are, rules to this little gambit…but not too many for those of us “rule challenged” folks (oops slipping into that accent again) to handle. The IRS capital gains tax rules are:
- This must be your primary residence (no rentals…but there are exceptions to that too)
- You must live in the house for 2 years (less than that and you owe a prorated tax).
- You cannot have sold a primary residence and claimed it within 2 years of the sale of this one
So, the moral to this story is…
- Don’t listen to the advice of someone you are having a casual conversation with, check it out!
- Always come to us to check out any “advice” you get from having a casual conversation with someone. If we don’t know the answer, we promise we won’t make one up, we will find out!
- If you are looking in to selling your home, or an ancestral home, or an investment home, Call us! We will show you what you need to do to sell your home, guide you in pricing it correctly so it will sell, and give you good, solid information so that you can make informed decisions.
Give us a call
…even if you are just thinking about it. We promise we won’t bite (well, I don’t anyway, Steve has been know to take a nip or 2 on occasion…lol).
Til later, ciao!Search For Homes