Happy Tuesday to you!
Something to consider when selling your property is the Capital Gains ramifications. Will you owe Uncle Sam money after the sale of your Summit County home? I'm no accountant, but here's the quick and dirty: Capital Gains is calculated as the difference between what you paid for your property and what you sell it for. Here is how to calculate Capital Gains:
Calculating Capital Gains
(+) PURCHASE PRICE - Price paid for property
(+) COST OF PURCHASE - Transfer fees, attorney fees, inspections
(+) COST OF SALE - Repairs, commissions, attorney fees, inspections
(+) COST OF IMPROVEMENT - Room additions, deck, for example, though not replacing existing
(=) ADJUSTED COST BASIS OF YOUR HOME
(-) AMOUNT YOU SELL YOUR HOME
(=) CAPITAL GAIN
Check with your accountant, of course, but even though the above calculation may indicate you owe Capital Gains, there are some special real estate exemptions. Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a Colorado home is exempt from taxation if you meet the following criteria:
- You have lived in the home as your principal residence for two out of the last five years.
- You have not sold or exchanged another home during the two years preceding the sale.
NOTE: As of 2003, you may also qualify for this exemption if you meet what the IRS calls "unforeseen circumstances" such as job loss, divorce, or family medical emergency.
Don't forget about the 1031 Tax Deferred Exchange to defer any taxes on your second home or investment property. Please give us a call if you'd like a brochure with more details. If your property doesn't meet the exemption criteria, keep in mind that the Capital Gains tax rate is pretty low- 15% right now. The rate may or may not go up in 2010, but I think we can be pretty sure that it won't go down!
A friend recently sent me a list of “Don’t Forget What You Already Know” quotes, and I’d like to share some of them with you:
I’ve learned that, no matter what happens, how bad it seems today, life does go on, and it will be better tomorrow.
I’ve learned that making a “living” is not the same thing as making a “life”.
I’ve learned that if you pursue happiness, it will elude you. But, if you focus on your family, your friends, the needs of others, your work and doing the very best you can – happiness will find you.
I’ve learned that whenever I decide something with an open heart, I usually make the right decision.
I’ve learned there are 3 kinds of people: those who make it happen, those who wait for it to happen, and those who look around and say “Hey, what just happened?”
I’ve learned that when you lose, don’t lose the lesson.
I’ve learned that it does not matter what lies in front or back of us; it is what lies within us that matters.
I’ve learned to avoid burning bridges…you never know if someday that bridge will be the one you must cross.
I've learned the happiest people don't necessarily have the best of everything; they just make the best of everything they have.
I’ve learned that life is like riding a bicycle. To keep your balance you must keep moving.
Make it a great day.....