Tax Benefits of Selling Real EstatePosted by Veronica Hicks on Monday, February 14th, 2011 at 2:30pm.
There are tax benefits to selling real estate. Most people are aware of the tax benefits of home ownership and the ability to write off the mortgage interest paid when it comes to filing an annual tax return. In addition the tax laws regarding capital gains that are received when selling a condo are in a seller’s interests. If a homeowner’s profit is $250,000 or less he does not have to pay a capital gains tax. Likewise if a couple owns a condo together they can earn up to $500,000 tax-free profit off the sale of their condo. This is one tax benefit that makes investing in a primary residence very appealing indeed.
There are a few rules to follow in the capital gains scenario of selling a condo. The first rule is that the condo has to be a principal residence. Another catch is that you must have lived in the condo for two out of the past five years. Unlike the past however, when you had to buy another condo within a specified period of time, you do not have to buy a new, more expensive condo with your profit.
The tax benefits of owning and selling real estate are what make owning a condo more attractive than renting. Anyone who has steady income, money saved for a down payment, and good credit is in a great position to take advantage of high affordability levels when it comes to buying real estate. The investment can be a good one come tax time.
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