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home ownership

Q&A: Complicated condo question

April 22, 2024 By Liz Weston

Dear Liz: You recently answered a question about gifting a condo. I understood the first part of your answer: If the person receiving the gift lives in the condo for two of the last five years, then there is no capital gains exposure. The second part of your answer is a little confusing to me. You wrote, “However, her taxable gain would be based on your tax basis in the property: basically what you paid for the home, plus any qualifying improvements.” So, if my mother gifted her condo to me and she paid $50,000 for it 40 years ago, and the condo today is selling for $250,000, what is my capital gains exposure? To keep it simple, assume no capital improvements or other factors.

Answer: Living in and owning a home for two of the previous five years does not erase someone’s capital gains exposure. Instead, they’re entitled to exclude up to $250,000 of home sale gains from their income.

In the case you describe, your potentially taxable capital gain would be $200,000. That’s the selling price of $250,000 minus your mother’s tax basis (which is now your tax basis) of $50,000.

If you owned and lived in the home at least two of the previous five years, your exclusion would more than offset your gain, so the home sale wouldn’t be taxable. If you didn’t make it to the two-year mark, you could get a partial exemption under certain circumstances, such as a work- or health-related move. For more details, see IRS Publication 523, “Selling Your Home.”

Filed Under: Inheritance, Q&A, Real Estate, Taxes Tagged With: capital gains tax, home ownership, home sale, home sale exclusion, Taxes

Monday’s need-to-know money news

March 11, 2019 By Liz Weston

Today’s top story: 10 lessons from the Bull Market’s 10-year anniversary. Also in the news: Money mistakes even smart people make, 3 things that change when you’re a homeowner, and why you should check your credit report even if your credit is frozen.

10 Lessons From the Bull Market’s 10-Year Anniversary
Learning from the past decade of rising stock prices.

Money Mistakes Even Smart People Make
Avoiding unwise choices.

3 Things That Change When You’re a Homeowner
A whole new set of responsibilities.

Check Your Credit Report Even If Your Credit Is Frozen
Freezes don’t ice existing accounts.

Filed Under: Liz's Blog Tagged With: bull market, Credit, credit freezes, home ownership, money mistakes, stock market

Friday’s need-to-know money news

March 8, 2019 By Liz Weston

Today’s top story: 3 things that will change when you’re a homeowner. Also in the news: 3 times you can pay taxes with plastic and come out ahead, eight ways you can save money right now, and what happens if you default on a loan.

3 Things That Change When You’re a Homeowner
All you’ll think about is money.

3 Times You Can Pay Taxes With Plastic and Come Out Ahead
Build up your rewards.

Eight Ways You Can Save Money Right Now
Automate your savings.

What Happens if You Default on a Loan?
Don’t take it lightly.

Filed Under: Liz's Blog Tagged With: Credit Cards, default, home ownership, Loans, real estate, Savings, Taxes, tips

Tuesday’s need-to-know money news

December 19, 2017 By Liz Weston

Today’s top story: 6 ways the tax plan could change homeownership. Also in the news: Bad loans lurking under Christmas wrap, checking your state’s unclaimed property list, and robocalls soar to a new record.

6 Ways the Tax Plan Could Change Homeownership
Important things to know.

Bad Loans Lurk Under ‘Christmas’ Wrap
A payday loan wrapped in a bow.

Hey, Harold, Pick Up Your 300 Bucks
You could have unclaimed property waiting for you.

Phone spam soars to a new record
Fraud calls are at an all-time high.

Filed Under: Liz's Blog Tagged With: Christmas loans, Do Not Call list, home ownership, robocalls, tax plan, unclaimed property

The Huge, Hidden Costs of Owning a Home

April 27, 2016 By Liz Weston

refinancingFirst-time homebuyer Teresa Hair had owned her house less than two months when water started bubbling up through the guest bedroom floor.

“The whole floor was just covered,” says Hair, a 34-year-old attorney who lives in St. Petersburg, Florida. “I pulled up all the laminate flooring and there was an inch of water.”

Finding and repairing the broken pipe — it was in a wall shared with the kitchen, behind the dishwasher — cost $1,000. Replacing the flooring may cost considerably more. But the expenses aren’t a crisis, Hair says, because she resisted the urge to buy as much home as lenders said she could afford. She also made sure the purchase, including closing costs, didn’t drain her savings.

“I still had a little bit of money saved up, so I wasn’t strapped,” Hair says. “You have to know when you buy a house that you’re going to need something in addition to what you need to close.”

In my latest for NerdWallet, how the hidden costs of homeownership can equal if not exceed the mortgage payments you send to the bank.

Filed Under: Liz's Blog Tagged With: home ownership, real estate

Friday’s need-to-know money news

March 11, 2016 By Liz Weston

taxesToday’s top story: How to write a retirement plan. Also in the news: The tax advantages of homeownership, tax tips for members of the military, and the billions of dollars in unclimed tax refunds.

How to Write a Retirement Plan
It’s a lot simpler than you might think.

Still Renting? You’re Missing These Tax Advantages
Homeownership has its benefits.

7 Tax Tips for Military Members
The IRS has special rules for military members.

The IRS Says They Have $1 Billion in Unclaimed Refunds, So Make Sure to Claim Yours
If you didn’t file taxes in 2012, you could be missing out on hundreds of dollars.

Filed Under: Liz's Blog Tagged With: home ownership, military and taxes, real estate, Retirement, retirement plan, tax breaks, Taxes

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