Taxes When You Sell Your Home

What's the difference between death and taxes?

Death doesn't change every time Congress meets. But taxes certainly did in 1997, and the Taxpayer Relief Act of that year made a dramatic difference in the tax liability of those who sell their own homes. As it stands today, almost no one will owe any federal tax on profit made from the sale of a principal residence (defined by the IRS simply as the place you live most of the time.). To qualify, you must have owned and occupied the house as your main home for at least two of the five years before you sell.

And that's about it..

It won't matter how old you are when you sell.

It won't matter if you once used the old one-time $125,000 over-55 exclusion.

It won't matter whether you buy a replacement home or not.

It won't even matter if you've used this new exclusion on another main home in the past, as long as it was more than two years before the current sale.A single owner can take up to $250,000 gain free of any federal tax ever.

A married couple filing jointly can take up to $500,000. Even if only one of them owns the property, the full $500,000 is available if the non-owner spouse occupied the property for the required two years.

The exclusion can include postponed profit on previous homes, rolled over under the old pre-1997 rules. This new tax break can be used over again on the sale of another principal residence, as often as every two years.

You can even use part of the exclusion if you were in the house less than the full two years, if your move is required by one of three reasons: job transfer, health reasons, or some other unforeseen circumstance acceptable to the IRS.

So few home sales will require federal tax payments these days that in most cases your sale won't even be reported to the IRS by the person in charge of the closing.

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More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation's largest banks, a source said Sunday.

The talk show host pays $12 million for the 4,088-square-foot house with four bedrooms and four bathrooms. The ocean-view home sits on 1.26 bluff-top acres with beach access.

In one of the more talked-about transactions in town, actors Brad Pitt and Angelina Jolie have sold their Malibu beach house to daytime host and comedian Ellen De Generes for $12 million.

The four-bedroom, five-bathroom house built in 1920 for industrialist James Wigmore lists for $2,875,000.

A decorative cast stone entrance opens to this restored Spanish Colonial Revival-style house in Pasadena's South Orange Grove area. Built in 1920 for industrialist James Wigmore, the house retains such original details as coffered wood ceilings and arched doorways.

They don't believe they can sell their property for what it's worth, so they're spending money on making their homes more comfortable.

Do you fit any of these descriptions?

A biennial research report by the National Assn. of Realtors indicates that a handful of real estate agents and brokers and their clients either don't know the law or don't care to follow it.

When it comes to lawsuits, real estate agents and brokers tangle mostly among themselves.

The president aims to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

 

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Standard & Poor's/Case-Shiller index of 20 large U.S. cities fell 1.3% in November from October as foreclosures continue to drag down the housing market.

Three straight months of home-price declines in the biggest U.S. cities showed that foreclosures remain a significant drag on a housing market that is entering its fifth year of deterioration.

L.A. Clipper Chris Paul may be quick down the court, but he moves pretty fast when it comes to buying multimillion-dollar real estate too.