Tax-Gain Exemption

One tax exemption available to homeowners is the Capital Gains Sale Exemption. This exemption allows a home seller to exclude $250,000 in capital gains (or $500,000 if married and filing jointly).

In order for a seller to qualify for this capital gains exemption, the property being sold must be the seller’s primary residence for at least two of the past five years (does not have to be continuous).

You can also add capital improvements to the cost basis of your home to reduce the capital gains that you would have to pay taxes on. Investment properties also qualify for this capital gains tax exemption, however the two year residency rule still applies. 1031 exchanges do not qualify for the capital gains exemption.

Please consult your tax professional to discuss how you can take advantage of the capital gains sales exemption.

The information provided herein are not to be deemed legal advice and provide general information that is usually applicable to real estate transactions in New York City. Please consult with your attorney regarding the specifics of your transaction.