Today I discovered this post written by our colleague, Maria Morton, Realtor in Kansas City Missouri. It is clearly written, and her pictures are definitely worth a thousand words!
Whether one lives in Missouri or in San Mateo or Santa Clara County in California, this strategy is a valuable wealth-builder. If you'd like additional information, give me a call.
Moving On Up! - Capital Gains When Selling Your Home -
69% of people in the United States own their own home. One question I am often asked when a homeowner is considering selling their home is the amount of taxes they will be liable for on the sale.
The good news is that if you have lived in the house for 2 out of the last 5 years, making it your primary residence, you can claim an exempt from capital gains taxes up to $250,000. for single filers and $500,000 for joint filers.
The really good news is that you can claim this exemption every 2 years!
Think about this for a minute. Suppose you sell your home for $300,000. You use $100,000 to pay off the remaining mortgage, leaving you with $200,000.
You can then buy another home for $450,000 using $90,000 for the down payment, 30 year conventional loan @ 5%, and pocket the remaining $110,000. That's a nice way to move up in the world.
And in 2 years, you can do it again!
Why do people do this? People do this to move to larger homes as they require more space. They do this to build their wealth. Most people do not start out in a million dollar house, most people start out in a $150,000 house. A few people stay in their original home for 30+ years. Most people move every 6 years as their life changes. Really smart people use the capital gains tax personal exemption to buy better homes in more expensive neighborhoods and build their wealth.
Donald Trump did not start out as a billionaire; he started out with his father's company and built an empire using real estate as the vehicle. Most of us do not aspire to be as rich as Donald Trump but we all want more than we now have.
Real estate has been used by most millionaires as part of their wealth building strategies. Ray Kroc, selected the locations of his McDonald's franchises so that he was collecting real estate that appreciated in value over time. The railroad barons bought real estate with a vision well beyond that of most men of their time. Warren Buffet is still buying real estate.
Your goal may not be to become rich and famous; you may just want a better life for your family. Using the personal exemption for capital gains taxes is one way to help you get there.
When you're ready to start, call Maria for a personal consultation.
Prudential Kansas City Realty ♦ On The Plaza
435 Nichols Rd. 3rd Floor Kansas City, MO 64112
Residential Property Statistics for Zip Code 64113 Years 1997-2009
Kansas City Real Estate First Quarter Comparison Years 2008 & 2009
Jackson County Missouri Home Prices & Inventory 2002-2008
Waldo Kansas City Market Report March 2010
Morningside Market Report 2009
Johnson County KS Real Estate Market 2001-2009
Disclaimer: Visiting this blog, or any other website, does not create an agency relationship with the author or any third party. Posts on this blog are meant to impart general information and should not be construed as professional advice specific to the reader or to any particular situation. Please consult with your own retained attorney, accountant, inspector, tax specialist, real estate consultant, or other licensed professional to receive guidance and assistance appropriate to your specific needs and interests. All information is deemed reliable but not guaranteed. All content, including photos, are the original creation of the author unless otherwise noted. No part of this blog post may be reproduced without written permission from the author (with the exception of Member Reblogs, when activated). 2010 Kansas City Real Estate With Maria on Active Rain