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A quick introduction to a very important subject…
This issue of the Tax Reduction Letter is Part 2 of my three-part refresher course on how to get the maximum federal income-tax savings from the home-sale gain-exclusion tax break.
The gain exclusion at a glance.
With residential real-estate markets skyrocketing, the value of your home has probably increased dramatically.
That’s good news if you’re ready to sell, but what about the tax implications of the sale?
Here’s some good news from the IRS.
Thankfully, the federal income-tax gain-exclusion break for principal residence sales is still on the books, and it’s potentially a big deal for prospective sellers.
- You see, if you’re unmarried, the exclusion lets you shelter up to $250,000 of the gain!
- If you’re married, you can shelter up to $500,000!
IMPORTANT: Be aware of this fact…
One of the IRS requirements, for you to come out a winner, is that you have to sell your home within a specified period.
If you don’t, you violate the anti-recycling rule. (This will be explained in detail in my complete article.)
Take advantage of the prorated
loophole for “premature” sales.
Don’t give up if you think you missed the income-tax gain-exclusion.
Luckily, IRS regulations allow you to claim a prorated (reduced) gain exclusion.
That’s a percentage of the $250,000 or $500,000 exclusion that might otherwise be available in certain circumstances.
You’ll catch a break if your premature sale is due to several factors including…
- A premature sale due to employment change
- A premature sale due to health reasons
- A premature sale due to other unforeseen circumstances
- A premature sales in some other situations
And that’s just part of the story.
Needless to say, because we’re talking about IRS rules, this subject is extremely complicated and needs a fuller explanation.
That’s why I urge you to…