3 Major Tax Issues Every Buyer Of Real Estate Needs To Know

1.  Increase in the exclusion from capital gains tax on the sale of a principle residence from $125,000 in capital gains to $500,000 for filing joint taxpayers. ($250,000 exclusion of profit for single taxpayer). This exclusion can occur every two years. The repetitive ability is a great opportunity to buy and sell a principle residence and either move up or buy down. There is no age restriction on who is eligible for this exemption.

2.  First-time homebuyer incentives:

  • Save income in a tax-deferred IRA account with the purpose of saving for a down payment and withdraw down payment at any time without penalties for early withdrawal.
  • Parents can save money in a tax-exempt savings account for the purpose of assisting children with a down payment for housing

3.  Investments in real estate.

4.  Reduction in capital gains tax rate from 28% to 20%. This will increase the profitability of a real estate holding.

For these or any other tax law issues be sure to contact your accountant or tax advisor for further information and details.



The above checklist is for informational purposes only & is not a substitute for legal, tax or other professional assistance.