My husband and I are moving from New York to Pennsylvania and I must sell my home. Because of the jump in real estate prices, I’ve realized a nice return on my investment and I’m worried about paying huge capital gains taxes. Is there anything I can do to lower or avoid paying them?
–S. Boyce, New York
The good news is that, due to the Taxpayer Relief Act of 1997, it is quite possible that you may not owe any capital gains taxes at all from the sale of your home. Since May 1997, homeowners selling their home have been allowed to exclude any capital gains tax, provided they meet the following requirements:
The property must have served as your primary residence for at least two of the five years preceding the sale date.
The gain on the property must be less than $250,000 for single persons or $500,000 for married couples.
The owners must not have sold another home they considered their primary residence in at least the last two years preceding the sale date.
Since you are married, you could be entitled to exclude up to $500,000 in capital gains, provided you file a joint tax return with your husband. The most important thing for you to do now is determine exactly how much gain you would make from the sale of your home. You can find capital gains tax calculators on the Internet at http://homegain.com/tool_center or at http:// homebuying.about.com/cs/capitalgains.