3/29/2017

MoneyMatters101.com Home
The Economy

As Interest Rates Fall
Basic Obamanomics
Bubbles For Bathtubs
Build Strong Portfolio
Business Cycles
Capital
Decision Makers
Deflation
Economic Worries
Gains On Real Estate
Government Shutdown
Inflation
Losing Your Job
Playing Roulette
Protect Your Capital
Recession
Reinvest Gains
Tackling Fed. Deficit
The Economy
The Credit Bubble
The Middle Class
Tough Times
Venture Capital
We Are Saving Less
What We're Taught
What Went Wrong?
When Times Are Bad

Links

Email Us

Avoid Loan Fraud
Bank Failures
Loan Modification Act

Quotes

MoneyMatters101



 

Capital Gains On Real Estate

Homes and rental properties are the most valuable assets and the biggest capital investments that most people will probably ever have. The decision to sell property will have monetary and tax consequences that will follow them for years to come.

Capital gains taken from the sale of a home or rental property are taxed at different rates, depending on the sales price, how long the property was owned, the improvements made, and the mortgage interest payments.

With real estate, there will be tax consequences on capital gains no matter how the property is sold. If you sell it at a profit, you will have to pay capital gains taxes on the amount of profit you receive, although there are special treatments on certain properties.

As tax laws are now written, the sale of a primary residence allows for a significant amount of profit to be excluded from taxation. They include:

  • Up to $250,000.00 for exclusion by single taxpayers.
  • Up to $500,000.00 for exclusion by married couples.
  • Sellers need not be a certain age.
  • Sellers need not buy a replacement residence that is equal to or greater than the property being sold.
  • If you own a rental property, you can move into it and use it as your primary residence for two years or more. By doing this, you may sell it and avoid paying certain taxes on the profits.

Although real estate is great to own, it can be a money pit. You have to spend money on the purchase and upkeep of the property and you have to make the payments on the mortgage, property taxes, and maintain the necessary insurance.

Yet, real estate ownership provides the biggest tax breaks. By investing in real estate, you reap the benefits of writing off the mortgage interest on your loan payments, property tax deductions, and the costs of capital improvements..

The value of real estate and other types of property is tied to economic conditions. Real estate values appreciate over time, and may become a sudden bonanza of profit when there are periods of high inflation. The total opposite may happen when the economy goes through a period of recession and property values drop.

Inflation and recession both play huge roles in the prices of real estate, whether it is a primary residence, a summer home, or property that is used to generate income. Other market conditions may also effect property values.

Most people buy homes as a place to live, especially first time buyers who are just starting out and need a stable place to raise their family. But there are those who buy property for investment purposes and they watch market conditions in the real estate market like people who invest heavily in stocks and bonds watch daily stock reports.

 

Book of the Month

Advertise on MoneyMatters101.com

 

Share


Accessibility Policy| Terms Of Use| Privacy Policy| Advertise with Us| Contact Us

Use of this web site constitutes acceptance of the Terms of Use.

We are looking to create more mutually beneficial partnerships. If you are interested in partnering with MoneyMatters101.com, send us your proposal.

MoneyMatters101.com™

Link to MoneyMatters101.com