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Real Estate Tips

Tax Considerations >Your Tax Free Profits

Significant tax reform legislation was signed into law with the Taxpayer Relief Act of 1997. This legislation replaced both the one-time $125,000 tax-free exclusion for homeowners aged 55 and older, and the "rollover" deferment of capital gains tax requiring the purchase of a replacement home of higher or equal cost within two years of the sale of your principal residence.

With this change, a married couple filing their taxes jointly pays capital gains taxes only on that portion of home sales profits that exceeds $500,000. Single taxpayers, heads of households, and married persons filing separately may exclude up to $250,000. The exclusion is available for all sales of homes that occurred on or after May 6, 1997. Homeowners can use this tax-free provision every two years.

You are allowed to keep these tax-free profits only if you have owned and used the home as your principal residence for two out of the five years prior to the sale of the property. Although the regulations do not require continuous occupancy, the IRS specifies that your principal residence must be the home you use for the majority of time during the year. Consult your tax advisor about your personal circumstance.

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Real Estate Trivia

Q 
What famous American sign was originally erected as a real estate ad?

A 
The Hollywood sign, built in 1923, was conceived as a real estate ad that originally read, "Hollywoodland."
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Susan Gibson, REALTOR®, real estate agent and broker for Waynesboro, Staunton, Fishersville, Stuarts Draft and Augusta County, Virginia home listings, property and land for sale - NUMBER1EXPERT

Susan Gibson
Valley Real Estate Brokers, LLC

28 Imperial Drive
Staunton, VA 24401
Susan 's cell: 540-487-1000
Fax: 540-213-8701
Susan's Office: 540-487-1000
Info@BuyValleyHomes.com

Licensed To Sell Real Estate In The Commonwealth Of Virginia

Equal Housing GRI MLS REALTOR


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