Capital Gains Just Ain’t What They Used to Be – Learn How This Affects Homeowners
Posted by Mark Loscher | Visited 236 times, 2 so far today | Currently 3 Comments »
Starting January 1, 2009 the rules change for capital gains exclusion for home selling.
Under the current rules you are allowed a 100% capital gains tax exclusion up to $250,000 for an individual and $500,000 of gain exclusion for a couple. This is based on living in that home as a primary residence 2 of the last 5 years.
The new rule severely changes this exclusion. Now your exclusion will be based on the exact percent of days you lived in the home, for the length of your ownership. In other words, if you lived in the home 2 of the last 5 years you would only qualify for 40% of the gain exclusion.
If you had a $100,000 gain during the current program you would be exempt from it all, if you met the current criteria. Under the new program, same terms, you would only have a $40,000 exclusion and you will be taxed on the other $60,000.
Ouch! This probably wouldn’t hurt to many homeowners who only have one home and have lived in it for the entire time, but it will be a big hurt to those who have used this law to help them buy a second home for investment purposes. Is this how the government wants to keep our economy going?
Perhaps with a new President, this will be address with the other sweeping changes that need to be made in order to jump start our economy. Stand by!
Nice writing style. I look forward to reading more in the future.
Boy, how did they slip that one past us? Thanks for the heads-up Mark!
I’ve been involved in taxations for lengthier then I care to admit, both on the individualized side (all my working life-time!!) and from a legal stand since passing the bar and following tax law. I’ve rendered a lot of advice and rectified a lot of wrongs, and I must say that what you’ve put up makes impeccable sense. Please persist in the good work – the more individuals know the better they’ll be armed to handle with the tax man, and that’s what it’s all about.