When seniors reach a certain age, owning a home can become a burden. Seniors who want to sell their homes may have questions about the process. Some people may want to know what the fastest way to sell their house is. Others may want to know how to maximize their profits. However, almost everyone who sales a house will ask the question, “Do I have to pay capital gains tax when I sell my home?” The answer to that question depends on several factors. However, for most people who are selling a home that was their primary residence for more than two years, the answer is no.
What is Capital Gains Tax?
Capital gains tax is a tax levied on the profit gained from the sale of property or an investment. Your house, along with virtually anything that you own, is considered a capital asset. If you sell an asset for more than you paid for it, you’re required to report the profit that you made on that sale whenever you file your taxes. Technically, that profit will be subject to capital gains tax. However, more often than not, seniors who sell their homes can claim an exemption on capital gains related to the sale of their house.
How to Qualify for an Exemption for Capital Gains Tax
Capital gains tax can scare people sometimes who want to sell their homes. They’re afraid that paying taxes will eat dramatically into the profit that they made off of the sell. This is especially true for senior who sell their homes to cash buyers. However, more often than not, the sell of your house will be exempt from capital gains tax. These are the factors that will allow you to qualify for an exemption:
- If you owned your house for at least two years out of the five years that preceded the sale of the home.
- If the home that you sold was your primary residence for at least two of the five years that preceded the sale of your home.
- If you haven’t already claimed an exemption on another house that you sold in the two years preceding the sale of the house in question.
- If you’re single, you can exclude up to $250,000 dollars of any capital gain.
- If you’re married, you can exclude up to $500,000 dollars of any capital gain.
What About Seniors Moving into a Nursing Home?
Residency is, of course, something that the IRS takes into consideration when determining whether or not you can exclude the capital gains made from selling your home. This may be concerning for seniors who’ve moved to a nursing home but are still looking to sell their homes. However, for seniors in that situation, the residency requirement is lowered from two years to one year. Further, is seniors live in a nursing facility, but still own their homes, then it counts, of course, as ownership.
Best Way for Seniors to Sell Their Homes
The way that you choose to sell your house will depend on several factors. Are you willing to wait a long time? Are you okay with lot’s of paperwork? If so, you may want to hire a real estate agent to list your house and sell it for maximum profits. However, if you’d like to sell your house quickly, minimize the paperwork and keep all of the profits yourself, then you should sell your house to a cash buyer.
At Buymi.house, we specialize in closing on houses quickly. We know that you have more important things to worry about. We want you to be able to focus on those things instead of stressing about your house.
Do you have a question about the house selling process? Do you want to get a cash offer on your home? Even if you don’t decide to sell, we’d love to answer any questions you might have. Give us a call today at (586) 200- 1710.