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There are a few general rules to remember to avoid paying a capital gains tax on your home sale:
• You have to have owned the home and used it as your primary residence for at least two of the past five years before it was sold.
• The maximum profit you can exclude from capital gains taxes is $250,000 for a single person or $500,000 for a couple filing a joint return.
• You can exclude the gain from the sale of your main home only once every two years.
• If you own more than one home, you can exclude only the taxes on the sale of your main home—the one you live in the majority of the time.
• If you receive the 1099-S form (“Proceeds From Real Estate Transactions”), you’ll have to report the sale on your tax return. • If you can’t exclude all or part of your home sale from the capital gains tax, then you’ll have to declare the transaction on your taxes. • However, if you think you meet the requirements to avoid paying taxes on the profit from your home sale, act quickly at the close. You can certify with your Realtor®, lender, and settlement attorney (or title agent) that you qualify for a tax exclusion when the sale closes. If you didn’t notify anyone when the sale closed, you can still inform them by Feb. 15 of the year following the sale. Once that’s done, you won’t have to declare your home sale on your income tax return.
Determining the size of your profit isn’t as simple as calculating the difference between what you owed on your mortgage and the sale price of your home. For tax purposes, you need to calculate an “adjusted basis” for your home, which involves in the following: • The original price your paid for the home • Adding in the cost of any improvements you made. This doesn’t mean routine maintenance—these improvements need to be substantive changes that added to the value of your home • Subtracting any items you claimed to reduce your tax bill during the years you owned the home, such as depreciation, casualty losses, or energy credits. Once you’ve done those calculations, subtract them from the sale price to arrive at your profit.
Of course, there are exceptions! These exceptions may allow you to qualify for a full or partial exclusion.
• If you are in the military, federal intelligence, or the foreign service and have spent some time working abroad over the past few years, you may be exempt from the rules outlined above.
• You may qualify for a partial capital gains tax exclusion if you sell your house due to a change of employment, change of health, or other unforeseen circumstances, including divorce.
As always with tax issues, consult a qualified tax adviser to ensure you follow the rules and maximize your tax deductions.
As our military was overseas fighting for us, the banksters back home were conducting illegal foreclosures conducted in violation of the Service Members Civil Relief Act.
With many vets suffering from war related illnesses, the realtor community can provide a valuable link to displaced veterans who may have fallen “off the society’s radar”.
As part of the settlement each lender must set up a hotline so service members don’t have to rely (snail) mail finding them.
So let’s get this settlement info out to any service members that were victimized so the funds don’t go unclaimed.
The Department of Justice has announced Bank of America, JPMorgan Chase, Citi, Wells Fargo and GMAC Mortgage have agreed to pay $123 million dollars for conducting 952 non-judicial foreclosures conducted in violation of the Service Members Civil Relief Act.
Bank of America has already paid approximately $35.37 million to 286 eligible service members as part of a separate settlement with the DOJ.
The non-judicial foreclosures in question took place During Jan. 1, 2006 thru Apr. 4, 2012.
Under the terms of the SCRA, non-judicial foreclosures are prohibited against service members who are in military service or within the applicable post-service period, as long as they originated their mortgages before their military service began.
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Interested in purchasing a foreclosed home? Take a look at the foreclosed homes available for purchase at the following link:
J.R. Thrasher BRE Lic: 01888955 Keller Williams Realty www.SanDiegoRealEstateVeterans.com www.Facebook.com/SanDiegoRealEstateVeterans 619-929-0105 Cell 888-959-7089 Fax
San Diego Real Estate Veterans 