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TAX-FREE PARLAY
Did you know that you can combine the rollover (deffering gains tax if you buy a home more expensive than the one you sell) and the $125,000 tax exclusion for those over 55—even if your new home costs LESS than your old home?
Let’s say you are 56 and have bought and sold three residences over the years. You have used the rollover to shelter profits and have built up an untaxed capital gain of $130,000. you get an offer of $160,000 for your present home, but only want to buy a condominium for $75,000. Thanks to the tax-free parlay, you can buy the less expensive condo and still es^-pe any current tax on the $130,000 gain.
First you sell your home for $160,000 and elect the $125,000 exclusion. This not only wipes out $125,000 of your $130,000 gain, it also reduces the amount you have to roll over, dollar for dollar (from ${*0,000 to $35,000 in this case). So you can buy the $75,000 condo and easily get out from under the remaining $5,000 capital gain. Total shelter: $130,000.
If there is anything we can do ’ to help you in the field of real estate please stop in at EILEEN M. DAY, Realtor, The Clopton House, Washington, Va. 22747. Phone 675-3003. We’re here to help.
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