Consult Advisors

When selling your home, you should have all the information available in order to make sound financial decisions. In addition to your REALTOR^®, it is wise to meet with your financial planner and other advisors to fully comprehend the nuances that are involved in the sale of your home.

It is highly probable that you will incur capital gains, which is a tax levied on profits from the sale of a property or other investment. The single largest asset most people own is their residence. If specific conditions are met, you can exclude up to $250,000 as a single person or $500,000 if you are married filing jointly.

It’s important to find a REALTOR^® that understands you, your lifestyle, and your unique requirements. You need to trust their capabilities, experience, and professionalism. You need to find someone with whom you can connect, as this person will be assisting you in one of life’s biggest decisions: selling your home.

The three conditions for this reduction in capital gains are (always check with your financial advisors for the latest tax laws as the laws are changing with each administration):

• You’ve owned your home for at least two years
• The house has been your primary residence for at least two years
• You haven’t claimed these exclusions previously on another property
• The home must be your primary residence
• You must have owned the home for at least two years
• You must have lived in the home for at least two of the past five years

There are two types of capital gains: short-term and long-term. Short-term capital gains apply to investments owned and sold for a year or less. Long-term capital gains apply to assets sold after they’ve been owned for a year or more. The costs associated with short-term capital gains are considerably higher than those of long-term, often 10 to 20 percent more.

Your Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) or Certified Financial Planner (CFP) will review the best plan of attack for you to minimize any tax implications.

As a foreign investor, the sale of residential property will have other financial implications that you need to fully comprehend. Your financial team can assist you in understanding, in detail, what these items are and what steps should be taken to mitigate their impact. Dawn is part of a group of Bay Area attorneys and other professionals. She would be happy refer you to the best professional to help you with your individual needs. Don’t hesitate to reach out to her for a referral!

Odds are, you will sell your home and buy another. Propositions 60 & 90 allow homeowners to transfer their property tax basis from the original property to the newly acquired home if certain conditions are met. Dawn and your financial team can assist you in understanding how to take advantage of this opportunity.

Consulting an attorney may also be necessary depending on the complexity of your estate. Additionally, there could be situations that exist as a by-product of those complexities so obtaining legal advice is essential. Some examples include:

• Is the property being sold in some state of distress?
• Are you the heir or executor of a property whose owner is now deceased?
• Are you selling a house with a non-cooperative partner?
• Do you anticipate issues based on knowledge you have about the property?
• Do you have judgments or liens in your background?

These conditions could result in a more complex transaction in which involving an attorney is a sound decision.

By working in concert with your REALTOR^®, financial, and legal consultants, you should be armed with the knowledge necessary to minimize any issues that could arise from the sale of your home. To learn more about whether or not you need a real estate attorney in your transaction, click here.

Armed with the knowledge of all the financial and legal implications the sale of your home entails, let’s discuss the process of preparing your home.