What homeowners need to know about capital gains exemptions.
Today, I’m here to talk about a very important topic: tax exemptions. I often get asked this question when people are selling their properties: “Will I have to pay capital gains tax to the government on my equity appreciation?” To find out, let’s do some simple math.
If you’re single, you can make $250,000 off capital gains before paying taxes. Therefore, if you bought a house for $500,000 as a single person and its value increased to $650,000 when you sell it, you won’t have to pay capital gains tax.
If you’re married, you can get up to $500,000. However, if you’ve lived in the house for less than two years, there might be some tax exposure, so you’ll need to consult with a CPA. Different circumstances could affect your tax exposure, such as relocating for work, which your CPA will take into consideration.
Please note that I am not a CPA, so I recommend that you consult with one. If you need a recommendation, I’m happy to share my CPA’s contact information with you. Also, remember that this tax exemption is only applicable to your primary residence, not if you turn the property into a rental.
If you have any questions about these things, feel free to call or email me. I look forward to hearing from you!