Tax Tip for Homeowners
Is it possible to have too much equity? Welcome back to Stay Focused, Focus Real Estate's weekly video series. And I'm here alone to talk to you about taxes in the month of April.
And just wanting to talk about the equity that you have in your home. We're really spoiled up here in the North East with the acceleration of home values. For a single person when you go to sell your home, your have a $250,000 forgiveness from the federal government for capital gains. As a married couple or a couple, you have $500,000 worth of forgiveness for capital gains in your home.
Do you have more than that? Is it time to reset those gains and maybe move out of the property that's no longer serving you whether your family has gotten bigger, or has gotten smaller, or you just want a different space. Is it time to think about how taxation can actually lubricate this process of helping you get into that next space?
There are some tax advantages for resetting those capital gains every so many years because it's not unusual to have five, six, seven, 800,000, a million dollars worth of equity in your home. And when you go to sell that, you're gonna have to pay taxes on that amount, over that threshold.
Again, remember, there are other things that you probably wanna chat with your accountant on. I'm not an accountant, I do play one on a video every once in a while. But if you are using an accountant and if you are following the tax law, you're probably been deducting the amount of depreciation that you can every year.
It's 127th value of your home when you paid for it. So if you bought a home, a good accountant's gonna be deducting 127th of the value every year. Have you been in your house 20 years? If you have, you've got only seven more years to deduct that, which means you pretty much lowered your threshold all the way.
So you have capital gains to pay if you make that move. So just some food for thought, as we're looking at taking advantage of all of the tax incentives and obligations that we have in home ownership.
I hope that's helpful for you. If you have any questions, I do hope that you'll reach out.
And until next time, stay tuned, stay focused, and stay tax friendly.
Did that make sense?