Make $$$ With Tax Strategies for the New Year!
The two strategies discussed below are perhaps the MOST IMPORTANT pieces of information that EVERY homeowner, or future homeowner, must know!
If you are not quite ready to take advantage of these tax benefits, perhaps your parents are!
Are you ready to move to a larger house, or downsize to a smaller house? Do you want to pocket cash from your appreciated house? With the two tax 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. You can use this strategy every two years! (ANY age – No age limit!)
2. Buy a new “downsized” house and take your current (lower) tax base with you. You are no longer trapped in a house simply because you have a low (below market value) tax base! (Must be 55 or older.)
Used individually or together, these two tax strategies can save you thousands of dollars now, and thousands of dollars every year for many years to come.
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Tax Strategy One: Put up to $500,000 – – Tax Free – – in your pocket! (Everyone can do this every two years!)
Just Like Tax Free Income! When you sell your primary residence you can make up to $250,000 in profit if you’re a single owner or twice that, $500,000 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 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 Strategy Two: Downsize and Take Your Property Tax Base With You!
Take Your 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 PROPERTY TAX BASE!
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, thanks to Proposition 13 you are still paying property taxes based on your adjusted original purchase price of $100,000.
Proposition 60 allows a “senior citizen” (Defined as: “at least 55 years old”) to transfer their current property tax base from their present house (In this example, with a tax base of $100,000) to a replacement house.
The resulting tax savings can be substantial! Say you bought a replacement house for $750,000. Rather than paying property taxes based on your full purchase price of $750,000, using this tax 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 value of your old house.
Click here to get additional information about this valuable tax saving program.