Quote:
Originally Posted by mtdjed
While not rent verses own, would seem that Capital Gain could be an issue for many at a time of lifestyle change.
Isn't the $250/$500K a cumulative lifetime exemption? For instance, I bought my first house around 1971 for @$25,500 but with only a $500 down payment. All subsequent houses (4) prior to The Villages were higher value but were paid for using funds gained from prior sales.
Sold last non-Village home for ~ $650K. Invested ~$350K on the Village house. Just for discussion, if home sold now for $650K, then total gain would be $625 before TV and $300K in The Villages or a total of $925K.
Some improvements made that may have increased value, but nothing significant.
Much of the increase is obviously due to inflation.
Questions.
1/Is the assumption regarding $250/$500K lifetime, correct?
2/ Does the increased value calculation for Capital Gains have an allowance for inflation?
3/Who tracks this maze? Do you need to calculate and report every time you sell? If so, Oops!
4/ Don't we all have to eventually checkout of home ownership? Assisted living, death etc.
|
Answers:
1. The $250/$500 capital gains exclusion is available for every primary residence house that you sell. There is no lifetime accumulation or limit on the number of houses that you sell. But, you must have lived in the house as your primary residence for 2 of the last 5 years immediately before selling it.
2. There is no allowance for inflation.
3. There is no requirement to report the sale of your primary residence to the IRS unless you owe a capital gains tax on it. There is no maze to keep track of because you can benefit from the capital gains exclusion as many times as you want.
4. Yes, everyone will eventually lose ownership of their house through a sale, a gifting, or death.