In the past week, I have overheard three different discussions about capital gains when someone is selling their Park City home. Capital gains on the sale of a primary residence is often misunderstood and because I'm not a CPA, tax advisor, etc I must say it's best to consult a licensed professional regarding any proceeds when selling a property.
Here's what the IRS has to say about the sale of your home: "If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home, provides rules and worksheets. Topic 409 covers general capital gain and loss of information." https://www.irs.gov/taxtopics/tc701.html - Topic 701 - Sale of Your Home
In some real estate markets, the average home is below $250,000 so this is not a big issue but in Park City where the median home value is $1,000,000 to $1,300,000, seasonality and area of town can play a big factor in the price. If you have owned the property for twenty years or even if you purchased the property at the bottom of the market in 2009-2010 there could be tax ramifications when selling the property.
One more thing! If you have owned your primary residence for less than two years and need to sell, there may be some options to capture some of your gains tax-free.
* By this point you can tell that I offer no advice regarding taxes or investments except for consult a licensed professional (CPA, Attorney, etc) for your specific situation.Posted by Derrik Carlson on