Thanks to some last-minute negotiations among members of Congress, a capital gains incentive for home sellers with less than 5 years ownership remains in tact. For homeowners in the habit of flipping properties on a regular basis, or facing a change in life circumstances that dictate moving to a new property, this development holds significant tax benefits.
This OVM Financial Team Move blog post, provides more detailed analysis, as well as more factors to consider under the tax developments in effect in 2018. But here is the essence of this development.
In both the House and Senate versions of the tax bill, sellers were only allowed to qualify for capital gains in houses they resided in for at least 5 of the last 8 years. In the version that became law, the previous statute of 2 years residence over 5 years was retained. Sellers may only use this provision once every 2 years, but it allows for individuals to exclude up to $250,000 in qualified gains and couples to forego taxes on gains of up to $500,000. It’s quite a significant savings for the average family that is position to benefit from increased property value over the lifetime of their home ownership.
It should also be noted that there are additional exceptions available for military personnel, government housing residents and other circumstances. It’s a good idea to discuss your home ownership plans with experienced real estate professionals or home finance experts such as Sanford’s Team Move organization, before making any decisions. And always seek tax advice from a certified public accountant or licensed tax professional, before undertaking transactions with tax implications.