Hey Kyle here with LVN real estate your Denver cash home buyer. We Buy Houses fast fair and make your life easy. I wanted to talk about selling your property and the tax that you might need to pay. I have good news and I have bad news depending on who you are. If you are living in your house as your primary residence, you might be able to have huge tax exemptions.
For example, if you have lived in your house for at least two of the last five years as your primary residence and let’s say you sell your house for $250,000 but owe zero dollars on it on it, meaning its free and clear then you are exempt from $250,000 of taxable gains. That means that you sell your house tomorrow to a Denver cash buyer like LVN Real Estate and you sold it to us for $250,000, you would pay zero taxes on that money and you would get two hundred fifty thousand dollars in your bank account.
Now, that’s the rule for single people. If you’re married the rate goes even higher. If you’re married and you’re exempt up to $500,000, so an example of this would be if you owe zero dollars on your property and you sell it for 500 thousand dollars you pay zero taxes on that $500,000 since it’s been your primary residence. If you were to sell your property for $600,000, $500,000 of that amount would be tax exempt and the other hundred thousand dollars you would pay tax on now.
One thing to make note of is that if you have a mortgage on your house, and let’s say you sell your house to LVN Real Estate for $200,000 and you have a hundred thousand dollar mortgage. Then the tax would be based on the $100,000, which is the amount of your equity, not your actual mortgage amount. Under the rules in this scenario, you would pay no tax if you sold your Denver house fast to LVN. The $100,000 falls below the $250,000 threshold.
The bad news would be for you landlords out there. If you are a landlord and you have not lived in your house for at least two of the last five years, you will have to pay tax on that gain. It will be long term capital gains tax somewhere between 15 and 20 percent. Many people that are selling their house for cash to a buyer like LVN Real Estate have lived in the house at least two of the last five years.
If you have owned your home and you’re a landlord, we have tax saving options for you as well and you should give us a call today because we can help you defer or save taxes on your sale for your Denver rental properties. Thanks for watching and let us know if you have any questions.