Tax Saving Strategies Put $$$ in Your Pocket

Two Valuable Tax Saving Strategies to Put $$$ in Your Pocket!

Two Tax Saving Strategies GUARANTEED to Save You (or your parents) Money!  If you want to upsize OR downsize your house you can make the tax code work for you AND put real money in your pocket!

Move to a Bigger House OR Downsize to a Smaller House:  Are you ready to move to a larger house, or downsize to a smaller house?   With the two tax saving strategies that I will cover this week, you may be able to:

1. Sell your current home and pocket up to $500,000 of appreciation as TAX FREE income and
2. Buy a new “downsized” house and take your current lower tax base (lower assessed value) from your old house with you!

Use One or Use Both!  Used individually or together, these two tax saving strategies can save you thousands of dollars now, and thousands of dollars every year for many years to come.

 

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Tax Saving Strategy One:  Pocket up to $500,000 Tax Free!

Get Tax Free Income!  When you sell your primary residence you can pocket up to $250,000 in profit if you are a single owner (twice that if you’re married) and not owe your Uncle Sam any taxes on your capital gain.

Example:  Say you paid $100,000 for your house years ago and now your house has sold for $600,000. The difference between what you paid for your house and the price that you sold your house for is called “capital gains”.  In this example, the capital gains are $500,000.

Thanks to the capital gains tax exemption for the sale of a primary residence, if you sell your house today for $600,000 you can keep the first $250,000 of capital gains TAX FREE and, if your spouse lives in your house with you, together you can keep the entire $500,000 of capital gains as tax free income!

Click here  to get additional information about this valuable tax advantage.

Tax Saving Strategy Two:  Downsize and Take Your Property Tax Base With You!

When you buy a house you typically pay property taxes based on the purchase price of your new house.  The purchase price becomes your “Assessed Value”.  As your house appreciates over time, your assessed value (for property tax purposes) usually remains lower than the current market value.

If you (or your parents) have been in your house for several years, chances are that your assessed value is considerably less than it would be if you were to buy your house today.  (Note:  If you sold your house today the assessed value would be stepped up to match the sale price and the new owners would pay property tax based on this new assessed value.)

You May be Able to Take Your Lower Tax Base With You!  If you are at least 55 years old you may be eligible to sell your current house and downsize by buying a new (or previously owned) house, AND RETAIN YOUR CURRENT (below market value) ASSESSED VALUE!

Example:  Say you paid $100,000 for your present house and you can now sell that house for $800,000. Although you house has a current market value of $800,000, you are still paying property taxes based on your original purchase price (and assessed value) of $100,000.

Proposition 60  allows a “senior citizen” (Defined as: “at least 55 years old”) to transfer their current assessed value from their present house (In this example, with an assessed value of $100,000) to a “replacement house”.

The resulting tax saving can be substantial!  Say you bought a replacement house for $750,000.  Rather than paying property taxes based on an assessed value equal to your full purchase price of $750,000, using this tax saving benefit you can keep the $100,000 tax basis of your old house.

Example:  Buy your new house for $750,000 but pay property tax based on the $100,000 assessed value of your old house.

Click here to get additional information about this valuable tax saving program.

The Ultimate Tax Saving Play:  Use BOTH of these tax saving strategies on a single transaction to pocket tax free cash AND retain your lower assessed value!

Step One:  Sell your house that has appreciated in value over the years and pocket up to $500,000 of tax free cash.

Step Two:  Buy a new house at today’s current market value and use Proposition 60 to retain your lower assessed value from the house that you purchased years ago when prices were lower.

If you are able to utilize one or both of these tax saving strategies you will become a tax saving, using the tax code to your benefit, keeping your money in your own pocket ROCK STAR!

Please do not hesitate to contact me if you have any questions, if you would like any additional information, or if you would like to discuss your individual circumstances.

Share Your Experience!  If you have used one or both of these tax saving strategies, or if you have a comment that you would like too make, scroll to the bottom of this page to share your experience!

Bregman Properties, Inc does not provide tax advice.  Please consult with your qualified tax professional BEFORE making any tax related decisions.

At Bregman Properties, whether you are buying OR selling, we will do whatever is necessary to make your real estate transaction a success!

Bregman Properties is your neighborhood specialist.  We are available to answer your questions, to provide advice and to negotiate your real estate transaction with your best interest as our primary focus.  We are always ready to provide you with outstanding representation for all of your real estate related needs.  “Experience the Difference”