Using Your Home To Create Profits

Do you have to pay tax on the profits you generate from the sale of your house?

If you have owned your primary residence for two years, that residence can be sold without incurring capital gains tax on the equity. The IRS Code 121 now allows a tax exemption up to $250,000 per seller ($500,000 for a married couple) when that home is sold.

With this in mind, this tax law can be used to create wealth through investment homes. This could be used as an alternate to investing in the stock market. Consider the possibility of purchasing a house that needs some fixing up, living in that house while doing the renovations, and then selling it after the work is completed. As long as you live in the house as your primary residence for two years during the five years before the sale, you can use this tax exemption repeatedly—without limit—but not more frequently than once every 24 months. Homeowners can therefore buy a home, live in it for two years, make profitable improvements, then sell it for a hefty tax-free profit. Even buyers who swear they will never move again may change their minds if there’s a big profit to be made.

Contact me about fixer-upper homes for sale and I will show you how to employ this technique.

The above content is for informational purposes only and should not be considered as legal, tax, or financial advice.