A client of ours just sold her home with a value increase of 37% which equates to $84,000… not bad for three years right? Better yet, all of that money was EXEMPT FROM CAPITAL GAINS TAX, which could have potentially been to the tune of $10-15,000. It’s not too often you hear about anything tax free these days, especially in California. How did she do this? In the simplest form, the rule states that if you live in a home 2 out of the last 5 years, you are exempt from paying tax on the profits up to $250,000 for a single person and $500,000 for a married couple.
We will defer to your tax professional to give you the specifics and exceptions. Between our guidance and theirs, let us help you make the best decision when it comes to your real estate investment.
This is a great article that goes in to more depth on the specifics of a Capital Gains Tax Exemption: