Tax Information

All information below is for informational purposes only. We are not here to give you tax and/or legal advice. Please see your legal and/or tax advisor for more information.

Exclusion of Capital Gains

According to The Real Estate Journal, the general rule of thumb is that if you sell your primary residence, you typically can exclude a gain of as much as $500,000 if you’re married and filing a joint return with your spouse (or $250,000 if you’re single or married filing separately) and meet certain conditions.

To be eligible for the full exclusion, you typically must have owned the home and lived in it as your principal residence for at least two of the five years prior to the sale. These exclusion amounts aren’t indexed for inflation. (When calculating your cost basis, don’t forget to include additions and other “improvements,” such as a new roof, deck or heating system. However, this subject and other adjustments you may need to make can be tricky. For details, see IRS Publication 523).

Please see your legal or tax advisor for further details.

1031 Tax Deferred Exchange

According to IPX [PDF link], the tax deferred exchange, as defined in Section 1031 of the IRS Code of 1986, as amended, offers investors one of the last great opportunities to build wealth and save taxes. The investor sell their investment property, use all of the equity to buy replacement investment property, defer the capital gain tax that would ordinarily be paid and leverage all of their equity into the replacement property. The two requirements must be met to defer the capital gain tax:

  • you must buy “like-kind” replacement property
  • you cannot receive cash or any benefits unless you pay capital gain taxes on the money.

Please see your legal or tax advisor for further details.

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