Homelowprice Part What a Seller Needs to Know

Homes for Sale & Taxes — What a Seller Needs to Know
In May of 1997, the tax code governing profit from the sale of a personal residence was changed. In the past, any gain from a home for sale could be taxed, unless rolled over into the purchase of a new home. The new Internal Revenue Service rules are more advantageous to sellers of homes for sale. You can no longer roll a gain into the new home; however, not all gain is taxable as in the past. Now, homes for sale have the first $250,000 of profit exempt from any taxes, if you are the owner and filing single status. If you file jointly with your spouse, your homes for sale gain is tax exempt up to $500,000 — this is a half-million dollars, tax-free profit. This means that if you purchased a home for $200,000, you could sell it for $450,000 as a single or $700,000 as a couple and incur no taxes on the profit. There is, however, a time and resident test that must be met in order to receive this tax exemption for your homes for sale profit. You must have lived in the home for two out of the past five years in order to qualify for the tax exemption. What If You Don’t Meet the Time & Resident Test So, does that mean that if you do not meet the time and resident test you then owe taxes on all of the gain? Not necessarily. The tax code allows for several specific exemptions to the time and resident test, when you must move due to certain qualifying events. Here are a few of those events: • You must move due to the health of one of the residents in the home (your immediate family) or the health of a relative who is in your care. • A death in your immediate family that incurs the move, such as a breadwinner dies and the spouse cannot afford to keep the home. • Divorce that forces a move. • The unemployment of a breadwinner (must be qualified for and receiving unemployment compensation) and cannot afford to keep the home. • A new job that is 50 miles further away from the home than the current job. Otherwise, if you drove 20 miles to your current job, then the new job must be at least 70 miles from the home to qualify for an exemption. • Your home was damaged from a natural or manmade disaster, and you were forced to sell it. • Perhaps an act of war or terrorism has caused the move. • Even the birth of twins, triplets and so on, made the current home for sale too small and impractical to keep. IRS publication 523, "Selling Your Home", covers many other unforeseen events that would qualify you for an exemption. When you do not meet the time and resident test but qualify under one of the unforeseen event exemptions, you receive only a partial exemption for the gain on your home for sale. You will be taxed on a pro-rated amount of the gain, based upon how long you actually resided in the home. If you lived there less than a year, then the profit from your home for sale is considered to be a short-term gain. This means, on the pro-rated amount you owe taxes, you will pay the same tax rate as you do on your 1040 income tax form. If you have lived more than one year but less than two in your home for sale, the profit is considered to be a long-term gain. Rather than paying the generally higher income tax rate, most people are taxed at 15 percent. So, if you have lived in the home for less than one year, it is to your advantage to remain there until you pass the one-year time mark — if at all possible. The changes in the tax code for profit on homes for sale is much easier now to calculate and typically are more advantageous to the seller now, than in the past. Of course before making any home selling decisions or plans, consult a Certified Public Accountant or other tax professional.

Homelowprice Part American High Society Up for Sale

Home of American High Society Up for Sale
The Rhode Island mansion that was the early 20th century summer home of the Astor family and has been described as the place where American society began, is seeking a new owner. Billed by the local estate agents as a "spectacular Gilded Age mansion" over-looking the Atlantic ocean, the 19,000-sq-ft, 39-room home is redolent of a period when families such as the Astors, Vanderbilts and Carnegies regarded such properties as mere summer cottages. The Newport mansion, which is priced at $16m (£8m), was built in 1851 by a New York merchant. Calvert Vaux, who co-landscaped Central Park, designed it in the Italianate style. In 1881 Beechwood was acquired for $190,000 by William Backhouse Astor, grandson of the fur and property magnate John Jacob Astor. William and his wife, Caroline Schermerhorn, or Line as she was known, invested considerably more than that in aggrandizing the interior with oak parquet floors, mirrored walls and French doors. Over 25 years, the couple built the mansion into an essential staging post on the high-society circuit, giving their guests the stamp of officialdom by creating "the 400" - a list of families and individuals who could trace their lineage back for at least three generations. The couple's son, John Jacob Astor, died on the Titanic in 1912. Other notable members include Brooke Astor, who died aged 105 earlier this month. According to estate agents the mansion has a string of claims to fame. Cole Porter is said to have written Night and Day on a visit there and it made an appearance in the 1956 film High Society starring Bing Crosby and Grace Kelly. In recent years Beechwood has been owned by a commercial company that offers it as a wedding venue and stages historic tours of the building. The company has reconverted it into the socially segregated environment it was at the time of the Astors, with meager servants' quarters and lavish upstairs rooms. Although there is no hint of who might become the new owners of Beechwood, the weakness of the dollar has led some to speculate that foreign bidders may vie for a piece of American history.