Are you a homeowner? Have you lived there for a couple of years? Are you 55 years old? Ya wanna ditch this place? Yeah, we’re talking about your home. Is it 1997? Big bummer.
We were gonna tell you that you could qualify for the over-55 home sale exemption. The Taxpayer Relief Act of 1997 added in this exemption, which was...tax friendly...to say the least.
If at least one homeowner was 55 or older, you could sell your home and avoid making tax payments on the sale. Say goodbye to house-related capital gains taxes...up to $125,000. Super soon after the Taxpayer Relief Act of 1997 was the 1997 Tax Reform Act, which made an edit to the over-55 home sale exemption. It raised the amount of excludable home sales tax to $250,000. For couples, it’s $500,000 in excludable gain possible. And guess what? You don’t have to be 55. You could be 5, if you own a home and are looking to sell.
The over-55 home sale exemption was meant to spur the housing market. Homeowners had more incentive to sell their homes with such a fat tax break. Before the exemption, homeowners could avoid the same capital gains tax from selling only if they upsized to a bigger home within the next two years.
But hey, when you’re in retirement, maybe you want to downsize. Less to clean, less to heat and cool...less is more. Except when it comes to age, in which case...more is more.
