May '22 Home Insights
==> When we find great contractors, we love referring them to clients and friends. We’re happy to tell you about Troy Barnum at Discount Garage Doors of Denver.
==> We’re educating you on the rules for excluding capital gains tax on the sale of your primary residence.
GREAT GARAGE DOOR REPAIR COMPANY
● The extension spring for my garage door snapped and, after careful research, I decided to convert the extension spring system to a more efficient system, called a “torsion coil.”
● I researched reputable garage door repair companies based on 5-Star Google and Yelp reviews, and obtained quotes from 7 different garage repair companies.
*10K cycles is the equivalent of 10-15 years of useful life
(more than enough for my purposes)*
● I hired Troy Barnum at Discount Garage Doors for the repair.
● Troy was professional with scheduling and transparent with his pricing, not to mention, by far the most competitive. Troy was scheduled out 3-4 days so he may not have been the best option had I not been patient.
● Troy's ultra-competitive pricing, professionalism, and job performance were so awesome that I am now a raving fan and wouldn’t hesitate to refer him to friends and clients.
Contact info for Troy is:
Troy Barnum, Owner
Discount Garage Doors of Denver
RULES FOR EXCLUDING CAPITAL GAINS TAX ON THE SALE OF PRIMARY RESIDENCES
● Taxpayers can exclude from capital gains tax, up to $250,000 for single filers and up to $500,000 for joint filers, if they meet both the ownership test and the use test:
∙ You must have owned and used your home as your primary residence for a period totaling at least two years out of the past five years prior to the date of sale.
∙ You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale.
● Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
● If you don't meet the ownership and use tests, you may still qualify for a “partial exclusion of gain” if the main reason for your home sale was:
∙ A change in workplace location (you were transferred for a new job)
∙ A health issue (you moved to obtain or provide medical care for yourself or a family member)
∙ An unforeseeable event (family death or the financial effects of unemployment)
∙ The percentage of the $500,000 or $250,000 gain exclusion that can be taken is equal to the portion of the two-year period that the seller used the home as a residence.
∙ For example, a single person bought a home for $700,000 in Aug. 2020, lived in it for 12 months and sold it in Aug. 2021 for $805,000 after moving out-of-state for a job. The maximum gain exclusion in this instance is $125,000 ($250,000 x (12/24)). So the $105,000 gain is fully excluded. You can use days or months for this calculation (reference: Kiplinger Tax Letter).
*Disclaimer: As you can probably guess, there are many complex eligibility requirements, limitations, and exceptions to the IRS’ rules for excluding capital gains tax from the sale of your home. Refer to IRS Topic No. 701 and IRS Publication 523 for complete rules. Better yet, contact us for a referral to a trusted CPA who can walk you through eligibility requirements step-by-step. Please don’t rely on any content herein without engaging a CPA or other qualified eligible tax preparer.*