Avoiding Capital Gains May Be Mistake
REM # A572
By Ilyce R. Glink
Summary: Ilyce helps home owners decide whether to sell their new home. Ilyce believes that paying a little tax is better than missing all of the profit.
Q: My husband and I have purchased a home and only lived in it for 5 months. In a very short time, the housing costs in our area have skyrocketed. Our house is now worth around $100,000 more than what we paid for it.
If we were to sell it and re-invest all of what we make into a more expensive home, do we still get hit with capital gains?
A: Yes. Unless you’ve lived in your home for two of the past five years, you will have to pay 15 percent capital gains tax on the profits. In your case, that would amount to $15,000.
The question is, why move now? Why not wait another year and a half until you can keep all of the profit tax-free? Do you believe that this is a temporary spike in prices and that prices will ultimately fall?
If that's your take, then you should sell and move into something that has more potential to increase in profits down the line or use your windfall and move into an area with a better school district.
Paying a little tax is better than missing all of the profit.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
LASTLINE
Quit Claim Deed Transfers Property Taxes
Quit-Claim Deed Question
Deed in Lieu of Foreclosure Will Hurt Credit Rating
Deciphering Credit Report
Job Change Impacts New Mortgage
Link to This Article
Like what you've read? Spread the word! You can link to this article
from your website by copying the following code and adding it to
a page on your website:
Copyright ©2001-2007. ThinkGlink, Inc.
All rights reserved. Reproduction of material from any www.ThinkGlink.com pages without permission is strictly prohibited.
Site designed by Walker Sands Communications
