Many Denver real estate buyers and sellers never consider how much they will pay in taxes when they sell their home. Their reactions always amaze me when I ask: “Do you know how much you will pay in capital gains tax from the profit on the sale of your home?”  Keep in mind that this is a typical conversation with someone who has just put their house under contract, or with someone who is thinking of selling and moving up. They usually respond that they plan on paying capital gains taxes on the profit. 

Well, guess what – you don’t owe taxes on the profit from the sale of your personal home if you have lived in it for two of the past five years.  The profit is tax-free and part of the Homestead Act, stating that the IRS won’t collect tax on sale profit of up to $250,000 if you’re single, or up to $500,000 if you and your spouse file a joint return for the sale of your personal home that you have lived in for two of the past five years.  Of course, if you have any specific questions regarding this topic, you will need to ask a professional tax consultant or lawyer since every situation is not the same.

This is a huge advantage for Denver homeowners, particularly those who are at a point where they may be able to buy their first home, do some work, sell it in a couple years, and leverage the profit to move up. 

For more information regarding buying and selling Central Denver real estate, please contact Drew Ambruster at Castle Real Estate at 720.840.1182.

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