Reason vs. Emotion
This is the time of year for showing your emotions but what about your homes?
If you are selling your home, real estate agents usually refer to it as a “house” and when you are buying a home agents will refer to it as a “home.” The reason is that when you a buying a home, it is more than just a purchase. After a long day at work you go home. Home is where you raise your kids. It is where you barbeque in the back yard, and plant a garden in the spring. Most buyers aren’t just looking for a place to sleep and eat; they are looking for a safe place to call home for years to come. Someday, the time may come for you to sell that “home” and when you do it will become someone else’s home. At this point, if you still think of it as your home, it will make selling more difficult. To sell your home you will need to make rational decisions and be able to let go emotionally. A buyer will be looking at your “house” and imagining it as their own and you will need to help them. So take excess photos off the walls, remove unnecessary mementos, clean out accumulated items and put them in storage until the house is sold. By doing these things when selling your house can help someone else find a home.
Capital Gains Tax Relief Update
When the 105th U.S. Congress passed H.R. 2014 the Taxpayer Relief Act of 1997, tax prepares jokingly referred to the complex measure as the “Tax Preparers Full Employment Act.” That’s because, unless you are know tax interpretation, revisions and calculus, you will need a professional tax preparer to guide you through the provisions that apply to capital gains from home sales, which make up only a fraction of the larger set of tax regulations. Here’s a brief cheat sheet to give you some quick insights on what the law means to you if you sold a home this year. • First, by now you should have long ago forgotten the old $125,000 tax exclusion on capital gains for homeowners older than 55 and the “rollover” law that allowed you to defer paying capital gains taxes provided you purchased another, more expensive home in time. Those laws are history.
• The relief act’s primary provision for home sellers is the capital gains tax exclusion – when you sell your home, if you qualify, you can keep, tax free, capital gains of up to $500,000 if you are married filing jointly or $250,000 if you file singly. Your capital gain on the sale of your home is the selling price minus your cost basis.
• To qualify for the $500,000 or $250,000 exclusion, the home must have been your primary residence for at least two of the prior five years.
• If you have a second home that is also a primary residence, it will take four years to qualify either or both homes. While you may qualify both, the law only allows you one exclusion every two years.
• If, through some qualifying unforeseen event, such as job change, illness or hardship, you are forced to sell before you meet the two-year residency requirement you can only prorate the $500,000 or $250,000 (not your gain) exclusion if you are forced to sell early. Unforeseen circumstances may be multiple births resulting from the same pregnancy, death of a homeowner or spouse, divorce or legal separation, health problems, loss of employment, change in employment status, or military duties, to name a few examples.
• There is another tax relief for homeowners with home-based businesses. As long as your qualified home-based business is in the same dwelling as your primary residence – rather than an unattached structure – you don’t have to allocate a home sale’s capital gains between the home and the business. For these and other tax law provisions, professional help is key to an accurate tax return.
Water in our Veins–Meet Lake James Real Estate
Please call us if we can help with any of your real estate needs at Lake James – who better to help you than people who live, play and work here!
Polly Leadbetter – Owner/Broker P/ 828-584-9999 C/ 828-443-5407
Shane Cook – Sales P/828-584-9999 C/828-443-3205
Rhonda Edge – Sales P/828-584-9999 C/828-443-6595
Amanda Hotchkiss – Sales P/ 828-584-9999 C/ 828-335-3001
Marc Parham – Sales P/828-584-9999 C/828-443-1337
Denice Rechtiene – Sales P/828-584-9999 C/828-432-6976
