If I sell my home, will I have to pay any taxes on the money I receive?
I know the title of this post is a little long but I wanted to make sure that the topic is clear. This is a question that I have received a few times from the clients that have sold homes.
In some cases you will have to pay a tax called “capital gains.” By definition a capital gain is “a profit that results from investments into a capital asset, such as real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.”
However, in certain cases you won’t have to pay a capital gains tax. If you sell your primary residence and have lived there for the last 2 out of 5 years, you will not have to pay capital gains. Please visit the following link for more information: http://www.irs.gov/faqs/faq/0,,id=199601,00.html
If you don’t qualify for the capital gains exemption based on the criteria above, you may do a 1031 Exchange and not have to pay any capital gains. More regarding 1031 exchanges coming soon!!!