Selling San Marino homes: The capital gains ramifications

When selling San Marino homes, my clients quite often have questions about the capital gains tax, and how it will affect them. Considering that some San Marino homes reach the $2 million mark, this is a relevant concern, and one I hope to address in this blog.

First off, the capital gains tax applies when you profit from the sale of a home. So if you’re breaking even or losing money, you can disregard this right now. If you do expect to make a profit, take heart. It’s quite possible you still will not have to pay any capital gains taxes.

When a home has been your primary residence at least 2 out of the 5 previous years, you may exclude up to $250,000 in profit from the sale for an individual, or as much as $500,000 for a married couple.

So, the first matter at hand is figuring out what your capital gains will be on the sale of a home. For a quick idea of what that total might be, I recommend the AMBAR FInancial Group capital gains tax calculator.

Selling San Marino homes: Capital concerns

What if I don’t meet the 2-of-5 rule?

There are some exceptions to the rule. These exceptions, if accepted, will generally only allow you a partial exclusion from taxes, but they will ease the tax burden somewhat. Those exceptions include relocation by an employer; health concerns; or an unforeseen circumstance (such as unemployment, death or divorce). I recommend contacting a tax attorney for further advice on what exceptions might apply.

Are there any other reasons I might not qualify for the exclusion?

If you’ve excluded your capital gains on the sale of another home during the two-year period prior to the sale of your current home, you will not be eligible. This means, you cannot sell your main residence -- and exclude the gains -- then sell your vacation home a year later with the same benefits. However, you could move into your vacation home for two years, and then sell it, and the exclusion would apply.

Is there an age requirement to qualify for the tax exclusion?

No. Prior to the Taxpayer Relief Act of 1997, the tax exclusion applied only to homeowners 55 and older -- and it could only be applied once in a lifetime. That is no longer the case. It was also true that at one time you could only claim the exclusion if you rolled your gains into the purchase of another home within 2 years. That rule also no longer applies. You can use your profits as you see fit.

Can I claim a capital loss on my taxes?

Sadly, no. While the IRS can tax you on your capital gains, you cannot claim a capital loss on personal real estate.