When selling your home you can exclude up to $250,000 of your profit from taxes if you file your income taxes singly and $500,000 if you file jointly as a married couple. To qualify, the home must have been your principal residence for at least 24 months of the previous 60 months. This provision may be used once every two years. You are only required to pay capital gains tax on any amount in excess of the exclusions. This tax break was one of the principal features of the Taxpayer Relief Act of 1997
For profits in excess of the exclusions, the Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered the capital gains tax rates from 20% to 15% for taxpayers in the higher income brackets and from 10% to 5% for taxpayers in the lower income brackets. These rates applied to properties purchased on or after May 6, 2003. In 2008 the 15% rate will continue for higher income taxpayers; while the 5% lower income rate will drop to 0% for the 2008 tax year only. On January 1, 2009, the 15% and 5% rates will be reinstated.
Consult your tax advisor to consider your particular circumstance. We have a list of tax advisors in Kosciusko County area, Warsaw & Syracuse for you to consider if you are looking for further information on this.
