Do I Have To Pay Capital Gains Tax If I Sell My Macomb County MI Home or Condo?

CHESTERFIELD TWP, Mich. - Feb. 22, 2015 - PRLog -- I get asked this question a lot from many folks who are thinking about selling their home or condo. Under current laws, if you sell your principal home (the home you live in) and you can make a profit, up to $250,000 of that profit from your taxable income. And that’s just the exclusion for an individual. Married couples can exclude up to $500,000 (if both spouses each meet the ownership and use tests below). So, depending on how much of a profit you make on the sale, you could theoretically have no capital gains tax bill at all.

I say ‘theoretically’ because in order to claim the maximum exclusion, you have to pass what the IRS calls the ownership and use tests (http://www.irs.gov/taxtopics/tc701.html). This means:

·         You have to have owned the house for two years.

·         You have to have lived in the house as your principal residence for two out of the last five years, ending on the date of the sale.

There are a few exceptions to these rules—for instance, if you had to move before your 2-year anniversary of owning the home due to job change or because you experienced what the IRS designates as an “unforeseen circumstance,” such as a divorce or natural disaster. In these circumstances the IRS will allow you to prorate the exclusion. As always, talk with your accountant to determine if you qualify or not.

Lastly, and what some would consider the most interesting way to avoid paying capital gains, is that the two years residency doesn’t have to be consecutive—crazy huh?- you just have to have lived in your home for a total of 24 months out of the five years leading up to the sale.

Now, that’s something to thank Uncle Sam for.

Want to know today's present market value of your  home or condominium? Check out our online CMA site at http://www.mymihomevalue.com/

Consistently ranked as one of Southeastern Michigan's associate brokers of Seniors Real Estate Help, Equity Sales and Short Sales. Rick Giese has over 27 years of Real Estate experience and is one of the areas Rick has a strong focus on assisting homeowners in need, Rick Giese offers a straightforward no nonsense consultation designed to give you all the information and facts to enable you to make the best decision for you and your family. As every situation is different, Rick offers his insight and knowledge of the real estate transaction process and all the options available to you to get the most money the market will pay or to help you avoid foreclosure. Call Rick Giese today at toll free 1-800-274-5656 or your free consultation of your situation and sleep better tonight.

For more information, contact Rick Giese at 586-242-3100 or eMail rick@rickgiese.com