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In a nutshell, if you have owned a home for five years and lived in it for at least two out of five years, or if you’ve owned the house for two years and lived in it the entire time, a single person has a $250,000 tax exemption. If you are married, as a couple, you have a $500,000 exemption. Any gains over those amounts are taxable. You should always discuss the sale of your home with a tax attorney, especially if you used the house for business or rented it out, as you may not be able to take the exemption on homes used for business or as a rental.
Figuring the Tax
Before you can estimate how much tax you might owe, you need to calculate the cost basis for the property. Figure the tax by completing these steps:
Figure the Cost Basis
Add the price you paid for the property to the cost of any significant improvements. Subtract any casualty and theft losses, closing costs you paid when you bought the house and allowable depreciation. You might be able to subtract some closing costs. If you inherited the property, the initial investment is the fair market value on the date of the death of the person who willed the house to you.
For gifted properties, if there is a gain, you use the donor’s adjusted basis in the cost basis equation. If there is a loss, the cost basis is the fair market value on the date you received the property as a gift or the donor’s adjusted basis, whichever is less.
Figure the Capital Gain
Once you have the cost basis, subtract it from the sale price of the house. For example, if you paid $500,000 for your home and you are now selling it for $1,000,000, you have a capital gain of $500,000. If you are single, you will pay tax on $250,000. If you are married, the exclusion is $500,000, which wipes out the $500,000 profit.
Reducing the Tax Owed
You may be able to use the Section 1031 exchange if you are selling a home used for business or that was rented out as long as you buy another house for business or to rent out. The new purchase cannot be for personal use and the exchange must be for “like-kind.”
The regulations for a Section 1031 exchange are limited and may be confusing. Always retain a tax lawyer or accountant to help you with your taxes, especially if you are buying and selling an investment property. If you are selling a million dollar plus home and you use it as your personal residence, you should still contact a tax lawyer. Depending on your finances, the tax lawyer may be able to help you avoid some of the tax.
Promoting a house to potential buyers sometimes can be difficult. Fortunately, there are lots of things that you can do to stir up interest in your residence.
Now, let's take a look at three tips to help you promote your residence to buyers.
1. Upgrade Your Home's Curb Appeal
Amazing curb appeal is essential, particularly for a seller who wants to differentiate his or her house from other available residences. If your house boasts outstanding curb appeal, it is likely to make a positive first impression on buyers. And as a result, buyers may be more likely to request showings to view your home in comparison to other available houses in your city or town.
To upgrade your house's curb appeal, you should mow the lawn, trim the hedges and remove dirt and debris from exterior walkways. Also, devote time and resources to repair any damaged home siding.
If you require assistance with home exterior enhancements, you can reach out to local contractors as well. In fact, these professionals can help you transform your home's exterior from drab to fab in no time at all.
2. Create an Engaging Home Listing
An engaging home listing makes it easy for buyers to learn about your home. It is clear and concise, and as such, enables buyers to determine if your home matches their expectations.
To craft an engaging home listing, it often helps to make a list of your home's features. If you include relevant information about your house in your listing, you can teach buyers about your residence.
In addition, you may want to include high-resolution images of your home in your listing. With high-resolution images, you can show off the true beauty of your house to potential buyers.
3. Use Social Media to Your Advantage
If you create a home listing, you can share this listing on Facebook, Twitter and other social networks. By doing so, you can make it simple for buyers to learn about your residence.
Don't forget to share your home listing with family members and friends as well. If loved ones can access your home listing, they can share it with others and help you promote your residence to as many potential buyers as possible.
For a seller who is worried about generating interest in his or her home, you may want to hire a real estate agent. If you employ a real estate agent, you can receive expert assistance as you navigate the house selling cycle.
A real estate agent understands what it takes to promote a house to buyers in any housing market, at any time. He or she will develop an in-depth plan to showcase your residence to prospective buyers. Plus, a real estate agent will help you analyze any offers to purchase your home and ensure you can optimize your house sale earnings.
Use the aforementioned tips, and you can promote your residence to potential buyers and speed up the home selling journey.
Preparing to list your home is a process, that when done correctly, can help you to achieve the best possible price as well as aid you in selling your home more quickly. Before you sell your home, there are a few small home improvement projects that you will want to have completed before your first showing.
Address Any Floor Issues
Carpet stains, worn areas, scratched wood, and crack tiles, can all be a turn off for potential buyers. If you have a newer carpet, performing a deep clean may suffice, but if it is older and worn, you should consider replacing it. Tile flooring should be replaced if cracked and if in good enough condition to keep, take the time to thoroughly clean the grout to get your floors looking like new. For hardwood floors, consider having them refinished so that they can look like fresh again.
Update Your Home's Hardware
Door knobs, drawer pulls, cupboard handles, and hinges can easily make a house look dated. This is an easy upgrade that can be made and requires little labor. Choose more modern designs and finishes and make sure that the theme is consistent throughout the room in your home.
Remove Popcorn Ceilings
If your ceilings are still covered in popcorn, now is the perfect time to be rid of it, to give your ceilings a more modern look. The good news with this improvement is that it will only cost you a little in ceiling paint and mainly requires time to complete. While scraping all of your ceilings may seem like a daunting task at first, you will be pleasantly surprised by how much it can change the look of the room.
Declutter Your Closets
Before you list our home, you will want it to seem as spacious, as organized, and as neat as possible. While most people know that closets are typically filled in most homes, when they are filled too much, it can make it hard to judge the available space. Declutter and get rid of anything that you no longer need. If your closets are still brimming, you may want to consider packing anything that you will not need until after your move and having it placed in storage.
Address Minor Repairs
Now is the ideal time to address any minor repairs that you have been putting off. Fix any plumbing issues such as clogs and leaks, repair any damage to walls and door frames, and replace any burnt out light bulbs. You want buyers to know that the house is well-maintained. It will make them more confident that major problems are less likely.
Tackle the small improvement projects above to get your home ready to list to help put you in the best position to get what you are looking for out of the sale of your home.
Ready to start a successful home selling journey? To achieve your house selling goals, you'll want to prepare as much as possible. Lucky for you, we're here to teach you about the home selling journey so you can enjoy an unforgettable property selling experience.
Now, let's take a look at three tips to help you kick off a successful home selling journey.
1. Identify Your Home's Strengths and Weaknesses
Your home has served you well for many years, but it may be far from perfect. Fortunately, you can allocate time and resources to analyze your house's weaknesses and transform them into strengths.
Oftentimes, it is beneficial to conduct a home inspection before you list a residence. A home inspection enables you to receive expert insights into your house's condition. Then, you can use a home inspection report to prioritize property upgrades.
You may want to conduct an appraisal prior to adding your house to the real estate market as well. By performing an appraisal, you can receive a property valuation that you can use to establish a competitive initial asking price for your home.
2. Enhance Your Home's Appearance
Curb appeal is key, particularly for a house seller who wants to speed up the property selling journey. If you mow the lawn, trim the hedges and perform other home exterior upgrades, you can improve your residence's curb appeal in no time at all.
Don't forget to remove clutter from inside your house too. Remember, your goal as a home seller is to make it easy for buyers to envision what life may be like if they purchase your house. If your home is neat and tidy, it may be simple for buyers to fall in love with your residence as soon as they walk through the front door.
3. Collaborate with a Real Estate Agent
If you are unsure about how to price your home, how to promote your residence to buyers or how to complete myriad house selling tasks, there is no need to worry. In fact, you can hire a real estate agent who will do whatever it takes to help you succeed throughout the property selling journey.
A real estate agent understands what it takes to sell a home in any city or town, at any time. As such, he or she will go the extra mile to ensure you can achieve the best-possible results.
For example, if you want to sell your home as quickly as possible, a real estate agent will craft a house selling strategy that allows you to do just that. On the other hand, if you want to optimize the earnings from your house sale, a real estate agent will handle negotiations with buyers so you can get the best price for your home.
Let's face it – selling a home can be challenging, especially for those who are unsure about how to navigate the real estate market. Thanks to the aforementioned tips, you can quickly and effortlessly begin the home selling journey. And as a result, you can move one step closer to enjoying a fast, profitable house selling experience.
A home listing often introduces a homebuyer to a residence. It may include home photos, a brief home description and details about various home features and amenities. As such, an effective home listing is a must-have, particularly for a home seller who wants to stir up plenty of interest in a residence.
Ultimately, there are several best practices to consider when you create a home listing, and these include:
1. Provide Accurate Information
Learn about your home, and you can provide accurate information about your residence in your home listing.
If you're unsure about your home's condition, it often pays to complete a home appraisal. That way, a property appraiser can evaluate your residence both inside and out, identify any problem areas and offer a property valuation.
Furthermore, if you recently completed assorted home improvements, you should include information about these upgrades in your home listing.
Whether it's new windows that you installed throughout your residence or an updated home air conditioning system, including details about various home upgrades in your home listing could help your residence stand out to potential buyers.
2. Include High-Quality Photos
You don't need to be a professional photographer to capture high-quality photos of your house. In fact, many smartphones and tablets feature first-rate cameras, and you can use these mobile devices to take photos of your house's interior or exterior.
As you photograph your home, remember the homebuyer's perspective. For instance, a homebuyer likely wants to see photos of a clean, pristine kitchen and other awe-inspiring images of your house. If you clean and declutter your house before a photo shoot, you can increase the likelihood that your home photos will capture homebuyers' attention.
On the other hand, if you want professional assistance, you can always reach out to a real estate photographer as well. A real estate photographer can offer home photo recommendations and suggestions and help you capture photos that show off the true size and beauty of your residence.
3. Collaborate with a Real Estate Agent
A real estate agent knows what it takes to craft an effective home listing. Therefore, if you collaborate with a real estate agent, you should have no trouble creating a home listing that hits the mark with homebuyers.
Typically, a real estate agent will meet with you, learn about your home selling goals and plan accordingly. He or she then will use the information that you provide to develop an engaging home listing.
With a real estate agent at your side, you can seamlessly navigate the home selling journey too.
For instance, a real estate agent will host open houses and set up home showings to promote your residence to homebuyers. Plus, he or she will keep you up to date about any home offers and provide expert advice at each stage of the home selling journey.
Creating an effective home listing may seem difficult. Fortunately, if you use the aforementioned best practices, you can craft a home listing that can help you generate substantial interest in your residence.