In Parts 1 and 2, you learned about tax benefits that can work for you if you’re buying Grand Junction real estate, and the deductions that can work for you on a home that you own. Now we’re going to talk about the benefits you can realize if you’ve decided “I think it’s time to sell my home.”
If you think that the IRS can collect taxes on every single dollar you earn, you’d be wrong. You can actually sell your home and not pay taxes on the money you get from the sale, with certain qualifications. If you’re Donald Trump and you’re looking to sell your penthouse, you’ll probably get enough green from the sale that you will end up paying taxes. But let’s assume that you’re not The Donald – you’re just The Average Joe.
Well, Joe, if you’re married, you can sell your home and pay no taxes on the first $500,000 you earn from the sale. If you’re single (and The Donald probably will be soon, the way he goes through wives), you can keep up to $250,000 tax-free.
And guess what? You can do this once every two years. Forever.
You’re thinking there has to be a catch, and of course, there is. You can only do this with your primary residence. That means that if you have a condo in the city where you spend most of your time, and a cottage in the mountains that you go to a couple of weeks out of the year, don’t try to convince Uncle Sam that the cottage is your main residence. That will fly like the proverbial lead balloon.
Now, aren’t you glad you took our little tutorial? Feel free to share what you learned with your friends – because we all pay enough taxes, don’t we? We deserve a few breaks.