If you are thinking of selling your home and your house has risen in value since you purchased it, or you have accumulated a lot of deferred profit from previous sales, the Taxpayer Relief Act passed in 1997 could be of tremendous value.

Prior to this law, when a homeowner moved to a smaller home, relocated to a less costly area, or made a decision to rent, they were left with unfavorable tax consequences. The old tax law allowed people who sold their homes to defer tax on any profit by buying a replacement home of at least equal value within two years. At age 55, they could permanently escape tax on up to $125,000 of profit, but any profit in excess of that amount was taxable unless a new home was bought.

The good news is that with homes sold after May 6, 1997, homeowners can make as much as $500,000 tax-free profits on the sale of a principal residence for joint filers or $250,000 for single filers. The $500,000 capital gains exclusion removed taxes as a consideration for most home sellers by giving them flexibility to trade up or down. It has also allowed homeowners to preserve the savings value of a home when they sell, provided they use the property as their principal residence for two of the prior five years prior to the sale.

Consult your tax advisor for your particular circumstance.

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Grace Santos-Michelman
Keller Williams Realty
411 N Central Suite 100
Glendale, CA 91203
Mobile: 818-795-3543
Office: 818-432-3215
Fax: 818-432-3232
Email: : gracemyrealtor@gmail.com

Grace promises to meet the needs of any buyer and seller and she will help her clients through many situations with her unique realty approach. Homeownership is the American Dream and you are about to embark on an exciting journey. Grace will personally guide you through the real estate process and is always at your service.