Financial planning plays a crucial role in building a successful portfolio, and we’re here to offer valuable insights, particularly in the realm of real estate. These two areas often intersect, and we’d like to share some useful information with you.
For instance, consider the scenario where a married couple filing joint tax returns can sell their primary residence every two years and enjoy up to $500,000 in capital gains tax savings. It’s our pleasure to remind those we’ve helped find homes about this option, helping them keep more of their hard-earned equity.
Of course, we understand that not everyone plans to move every two years to save on capital gains. Home values typically don’t appreciate that quickly, and people often become deeply rooted in their communities or simply adore their homes. However, failing to think ahead could potentially result in significant financial losses.
So, when might you contemplate this option?
If you’ve been residing in your Bay Area home for over five years, chances are you’ve already surpassed the $500,000 capital gains abatement threshold.
If we look at the time the average person stays in their home, it’s easy to see that using the $500,000 in capital gains relief every time you move could save the average person $1.5 million dollars of untaxed gain during their home ownership life.[1]
- 47% of Americans have lived in their homes for six to 10 years.
- 35% of homeowners have lived in their homes for 10 to 15 years.
- 16% have lived in their homes for less than five years.
- The average length of homeownership years is eight years.
If you’re approaching retirement or already retired and thinking about downsizing, selling your home while the market is thriving could be the ideal opportunity to implement your exit strategy.
Are you finding that your current home no longer accommodates your needs? With interest rates slightly below historical norms, now might be a good time to consider moving to a space that suits you better.
Are you concerned about higher property taxes on a larger home? The recently passed Proposition 19 in California may help ease the impact of increased property taxes. It allows you to transfer your existing low tax base to your new property, and with only a modest increase if you purchase a more expensive home. You can carry your existing tax base without adjustments if you’re downsizing.
We’re here to answer any questions about making a move if you are contemplating doing so.
However, if you have inquiries regarding tax implications or estate planning, we strongly recommend seeking advice from your attorney, CPA, or another qualified professional.
Financial well-being is important, and they can provide tailored guidance to suit your situation.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.
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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Drew Morgan—Broker Associate 01124318 | Christine Morgan—Sales Associate 01174047
CEO & President of Morganhomes, Inc. Real Estate licensed under RE/MAX Star Properties 01811140
