Do you want to save on taxes before you sell your home in Rancho Bernardo?
If you are a homeowner in Rancho Bernardo and you rented out your home during the Great Recession because you didn’t want to sell your home for less money, but you are thinking about selling your home now, you can learn how you can save on taxes to avoid paying more capital gains taxes on your equity.
According to the IRS, you can turn your Rancho Bernardo primary residence into a temporary rental and not pay capital gains on it if your home qualifies using the following guidelines: During the past five year period of time, ending on the date you sell your home, you must have: 1) Owned your home for at least two years; 2) Lived in your home for at least two years; 3) Rented it out for more than three years, and lived in it for at least two out of the last five years. If you are ready to sell your home Rancho Bernardo home, and you have equity in it, and you rented it out during the past five years, you will need to make sure you sell your home before you hit the fifth year date of ownership.
You will need to talk to your tax professional to find out how you can save on taxes before you sell your home. You should learn how the IRS code works for your situation to make sure you qualify to deduct the capital gains on your home when you sell it. Let’s say you decide to sell your home. It was rented for 2 ½ years and you lived in it before renting it out for over two years. To qualify for the exclusion of capital gains, you will want to prepare your home for sale, pricing it to sell, then selling and closing it within six months.
Another important rule to understand is that all of the equity you acquired during your Rancho Bernardo home ownership may not qualify for the capital gains exclusion. If you did not deduct for depreciation during the time it was a rental, you can only depreciate at a 25% tax rate. A $200,000 gain in equity could result in a $30,000 tax liability. You should consult with a tax professional to learn how you can minimize or eliminate all unnecessary taxes by following the IRS rules for timing and allowable deductions to save taxes before you sell your home.
We all agree that every Rancho Bernardo homeowner wants to sell their home for the most money and save money on taxes so they don’t pay more than they should. Your tax professional, CPA or financial planner should help you learn what to do to save money on taxes when you sell your home. You do not want to be surprised when you are told by the IRS that you need to pay more taxes on your home because you did not set it up properly to eliminate gains on your equity, or because you did not live in it, or rent it for the right amount of time. Read IRS publication 523 and consult with your tax professional if you rented your home and want to sell it now.
If you have a similar situation and you are want to sell your Rancho Bernardo home, contact me to help you determine your costs of sale when you sell it. I can give you estimates on home preparation, escrow and title fees, home repairs, commission and other expenses so you know what to expect. You will benefit from knowing what it is going to cost you before you even get started, and you will reduce your stress a lot by being aware of the tax issues you need to know about ahead of time.
There is no obligation on your part to sell your home with me, but knowing what to expect ahead of time will help you get ready and make your decision to sell easier. When You Sell your Rancho Bernardo home, it can be a very stressful experience. I will give you strategies to remain calm and stay focused on your goal of selling your home with the least amount of hassle. I will walk you through the four stressful phases of selling your home, so you know what happens during each stage; and I will guide you every step of the way though the sales process to manage the emotional roller coast ride that often occurs when you are involved in the sale of a home.
Learn more about the four stressful phases of selling your home, before you list your Rancho Bernardo home for sell home. Click here to watch a four part video series on the 4 Stressful Phases of Selling Your Home.
Do you want to know what your home is worth? Start here to get a FREE, accurate home value for your home. I will be happy to discuss with you your costs of sale and
If you have started thinking about selling your home, I want you to be ready so you can move forward and experience less pressure on yourself and your family, when you start looking for a new home and start the sales process.