Thinking of selling your home in this hot market? While you might be dreaming of a big payday, there’s a hidden cost many sellers overlook: capital gains taxes.
Data shows a record number of homeowners are exceeding the capital gains tax exclusion limit. This means they owe taxes on the profit from their home sale. Why? The exemption amount hasn’t budged in over two decades, while home prices have skyrocketed. It’s a case of outdated rules colliding with a booming market.
Adding fuel to the fire is inflation. The exemption isn’t adjusted for inflation, so even if your home’s value just kept pace with inflation, you might still be on the hook for taxes.
Before you list your home, consider the tax implications. An “Equity Transition Plan” can help you:
Minimize Taxes: Strategize your sale and renovations to maximize your tax-free profit.Reinvest Wisely: Plan how to put your windfall towards your next home or other investments.Plan for the Future: Find a home that fits your lifestyle and long-term financial goals.
Selling your home is a big move. Don’t let unexpected tax burdens derail your plans.
