Know Your Capital Gains Tax Exemption

Dated: 04/10/2013

Views: 1035

 

Meet Bill and Mary. A married couple, they sold their house last year and made a profit. Capital gains are subject to a federal tax. However, the profits Bill and Mary earned on the sale of their home are not taxed because of the capital gains tax exemption for profits earned on the sale of a principal residence.

Simply put, the capital gains tax is the tax you pay on the profit from selling your home. This seems basic enough but did you know:

  • With the home-sale exemption you can exclude up to $500,000 as a married couple of any profits from your capital gains taxes?
  • You can add capital improvements (money spent on improving the value of your home) to the cost basis of your home. This in turn, lowers the total profit you pay taxes on?
  • In order to take the home-sale exemption from your capital gains taxes the property you’re selling must be your principal residence?
  • There is no limit to the number of times you take the home-sale exemption from your capital gains taxes?

These are only a few things to know about the capital gains tax and selling your home. Be sure to get all the details about how capital gains affects you here and sign up for more alerts on changing home ownership tax issues.

 

*reprinted from http://homeownershipmatters.houselogic.com/

 

Maybe take your tax return and, say, but this awesome place listed by our good buddy Amanda?

Blog author image

TJ Anderson

TJ Anderson is a Nashville Realtor with Benchmark Realty who's helped countless clients both buy a home and sell a home in Nashville, Tennessee. He blogs about Nashville regularly, from Nashville-area....

Latest Blog Posts

Get Inspired By A Historic Nashville Bungalow Owned By A Young Nashville Star

by TJ AndersonLennon Stella's home, photo via People.comI was already impressed by Lennon Stella, who, by starring in TV drama Nashville, managed to build a double-threat career as an actress and

Read More

Nashville History Lesson On Pioneer John Donelson

By TJ AndersonWay back in the winter of 1779, while he was fighting the cold waters of the Cumberland alongside a hundred or so other early Middle Tennessee settlers, one figures John Donelson never

Read More

Stunning Luxury Home For Sale In Franklin Subdivision Hurstbourne Park

by TJ AndersonIf you’re looking to buy a home in Williamson County that gives you space for your family, room to entertain, lots of luxury and easy access to all that makes the area appealing: Let

Read More

Nashville Property For Sale That Lets You Build Your Dream Home In Your Dream Neighborhood

by TJ AndersonAlong with helping people buy and sell homes in Nashville, I’ve been busy over the past handful of years pursuing a related passion, and working with a team on building new homes

Read More