Keep more of your money!

People think that owning a home is a great way to save money, or should I say that the house goes up wildly in value, and there will so much equity - just is NOT true. It costs so much to own a home, maintain it, insurance, taxes, utilities and repairs. Most average buyers have NO idea of the costs of owning and don’t have enough money saved for a household emergency. Most buyers have no ideas what it costs to sell their house and what to do to keep more of the money.

Selling your home- if you do sale your home how much can you keep? Sometimes gains goes right into Uncle Sam’s pocket, however most of the time the tax rules on your primary residence are favorable. Only large capital gains , over $500,000 for  married couples, and $250,000 for singles are taxed if you lived there for at least two of the last five years before the sale date. This isn’t a one time event either. You can claim the profit exclusion each time you sell a principal residence if the requirements were met and not more frequently than once every two years.

WHY did you sale the home affects the tax outcome also- Work related move- 50 miles or more away from home, or  your old work location, you begin a new job 50. Spouse is included in this move  or change of job.

HEALTH related exceptions- you moved for several medical reasons , to obtain, provide or facilitate diagnosis. Get a doctors note confirming the exact details.

Rolling equity into another residence-NOPE,  You can’t defer or eliminate capital gain taxes by simply selling the house and rolling over the proceeds into another home that costs as much or more, that law changed in  the 1990s.

What happens if I sell my home for less than I paid? Can I deduct that  loss as a long-term capital gain loss?  NO, You can’t deduct a loss on the sale or exchange, of personal  use property, including your home.  You may be able to deduct property used for trade or business.

EXCESS above exclusions- the amount over the exclusion is taxed as long term capital gains- investment income, for purpose of taxation- 3.8% tax on net income.

What if my spouse dies?? You have two years to sell after the spouse’s death and you haven’t remarried ; as of  the sale date.  You can count any time your spouse owned the house as time you owned it, you also can count any time your spouse owned it as your residence.

Are there special exceptions for the disabled? Yes, there is a break for those who have a disability and can’t take care of themselves. You only need to show your residence was your primary for 12 months out of the 5 years, prior to the sale.   Also, any time you spend living in a care facility counts toward your residence requirements, as long as the facility has a license from that state.

Appeal your taxes (county assessor) if your taxes went up unusually high, you had an issue with your home or property  that could affect the value of your home(a flood, termite damage, settlement, law suit) or your taxes are way higher than your neighbors. Hire a professional.

Appraisal-Get your house appraised before you list the property, so you have a professional idea of what similar  properties SOLD for in your  area. Listings aren’t  an accurate indicators of value, don’t count on Zillow or online values, they can’t take into account, views, additions, upgrades, stigmatized properties and so on.

Be an educated buyer, read local papers, talk to neighbors, sit in the neighborhood at different hours of the day, buy where you know, chose a realtor who has a track record for your type of property and location. Understand YOUR housing market in your city. You get what you pay for.

Don’t think every upgrade is going to return money dollar for dollar. A new Pool, green or solar  upgrades less than 50% value, watch costs! Maintain your house;  new appliances,  AC, water heaters, roof, landscaping, exterior and  interior paint. Kitchens and bath remodels have the best return – often NOT money, but the house will sell faster, saving YOU monthly payments.

Average mortgage deduction(2014) for a $50,000- $100,000 property  $7,216.00

Average mortgage deduction for a $100,000- $200,000 property   $9,140.00

Understand average  inflation in the housing market is 3% in Tucson and NOT all areas have that.

Every little bit helps! Keep more money!