Modified Home Sale Exclusion for Non-Qualifying Use
By William Perez, About.com
When homeowners sell their main home, they can exclude up to $500,000 in capital gains from income tax. The Housing Assistance Tax Act of 2008 changes the rules. The amount of profits from the sale of a house that can be excluded is now based on the percentage of time when the house was used as a primary residence.
Homeowners who sell their primary residence can exclude up to $250,000 (or up to $500,000 for married couples filing jointly) in capital gains from their taxes. The amount of gain that will qualify for the exclusion is limited based on the amount of time that the house is used as a primary residence. If the house is used other than as a primary residence, capital gains must be allocated between qualifying and non-qualifying use. Any non-qualifying use can potentially reduce the amount of capital gain that can be excluded. The allocation rules take effect beginning January 1, 2009.
Qualifying Use vs. Non-Qualifying UseTaxpayers can qualify to exclude up to $250,000 in capital gains ($500,000 if married and filing jointly) when selling a house. To qualify, the person needs to own and live in the property has his or her primary residence for at least two years out of the five years ending on the date of sale.
Sometimes, however, the property isn't used as a primary residence during the entire five-year period. The house might be rented out, used as a vacation home, or used as a second home. Such uses of the home will be considered non-qualifying use and could subject gains from the sale of the house to tax.
Qualifying use means the property is being used by the homeowner or the homeowner's spouse as a primary residence. Non-qualifying use means the property is not being used as a primary residence by either the homeowner or the homeowner's spouse...
Temporary absences not exceeding a total of two years in aggregate will not jeopardize qualifying use. A property can maintain its status as a primary residence even if the homeowner is absence due to change in employment, health conditions, or other unforeseen circumstances.
Sources:
Section 3092 of Housing Assistance Tax Act of 2008 (H.R. 3221)
Summary of the tax provisions in H.R. 3221 from the Ways and Means Committee [pdf]
CCH Tax Briefing on the Housing Assistance Tax Act [pdf]
More Tax Planning: U.S. Quick Tips
source: http://www.about.com/, February 7, 2009
Saturday, February 7, 2009
Recouping Renovation Costs
Assessing the Resale Value of Your Renovations
By Lee Wallender, About.com, accessed February 7, 2009
It's closing day, congratulations. Break open a bottle of champagne and enjoy. Ready to renovate? Before you pound that first nail, always look ahead to your home's resale value. Certain modifications give better resale value than others.
High Resale Value
Siding Replacement - Upscale
Bathroom Remodel - Mid-Range
Minor Kitchen Remodel - Mid-Range
Siding Replacement - Mid-Range
Two-Story Addition - Mid-Range
Attic Bedroom - Mid-Range
Bathroom Remodel - Upscale
Major Kitchen Remodel - Mid-Range
Moderate Resale Value
Deck - Mid-Range
Basement Remodel - Mid-Range
Window Replacement - Mid-Range
Window Replacement - Upscale
Bathroom Addition - Mid-Range
Roofing Replacement - Upscale
Bathroom Addition - Upscale
Major Kitchen Remodel - Upscale
Roofing Replacement - Mid-Range
Family Room - Mid-Range
Low Re-sale value
Master Suite - Mid-Range
Master Suite - Upscale
Sunroom - Mid-Range
Home Office Remodel - Mid-Range
Check out REMODELING Online's excellent annual cost vs. value report for more info.
By Lee Wallender, About.com, accessed February 7, 2009
It's closing day, congratulations. Break open a bottle of champagne and enjoy. Ready to renovate? Before you pound that first nail, always look ahead to your home's resale value. Certain modifications give better resale value than others.
High Resale Value
Siding Replacement - Upscale
Bathroom Remodel - Mid-Range
Minor Kitchen Remodel - Mid-Range
Siding Replacement - Mid-Range
Two-Story Addition - Mid-Range
Attic Bedroom - Mid-Range
Bathroom Remodel - Upscale
Major Kitchen Remodel - Mid-Range
Moderate Resale Value
Deck - Mid-Range
Basement Remodel - Mid-Range
Window Replacement - Mid-Range
Window Replacement - Upscale
Bathroom Addition - Mid-Range
Roofing Replacement - Upscale
Bathroom Addition - Upscale
Major Kitchen Remodel - Upscale
Roofing Replacement - Mid-Range
Family Room - Mid-Range
Low Re-sale value
Master Suite - Mid-Range
Master Suite - Upscale
Sunroom - Mid-Range
Home Office Remodel - Mid-Range
Check out REMODELING Online's excellent annual cost vs. value report for more info.
Homes under contract for sale increasing
Pending home sales rise in December
The number of sales contracts signed increased by 6.3%, as buyers respond to fire sale prices driven by a record number of foreclosures.
By Les Christie, CNNMoney.com staff writer
Last Updated: February 3, 2009: 12:10 PM ET
NEW YORK (CNNMoney.com) -- Plunging home prices and low mortgage rates pushed homebuying activity higher in December, according to a regular industry report released on Tuesday.
The Pending Home Sales Index, from the National Association of Realtors, measures the number of sales contracts signed each month. It rose 6.3% in December to 87.7, after dropping 4% in November to a record low of 82.5.
The index was 2.1% higher than its December 2007 level...
Sales activity gained the most traction the South, where the index jumped 13% in December. The Midwest was also much higher at 12.8%. The Northeast, however, slipped by 1.7% and the index in the West fell 3.7%.
Home sales also benefited from a drop in mortgage interest rates during the month. The 30-year, fixed-rate loan averaged 5.29% for the month, with the average borrower paying a fee equal to 0.7% of the mortgage principal. That was, by far, the lowest that mortgage rates had been all year...
The lower mortgage rates helped push housing affordability to record levels.
NAR's Housing Affordability index improved to 158.8 in December, up more than 29% year-over-year. That makes buying a home more affordable than any time since NAR started tracking the measure in 1970.
A household earning the median U.S. family income can now afford a home of $277,000, according to NAR. That's well above the national median home price, which was $198,600 in 2008.
The number of sales contracts signed increased by 6.3%, as buyers respond to fire sale prices driven by a record number of foreclosures.
By Les Christie, CNNMoney.com staff writer
Last Updated: February 3, 2009: 12:10 PM ET
NEW YORK (CNNMoney.com) -- Plunging home prices and low mortgage rates pushed homebuying activity higher in December, according to a regular industry report released on Tuesday.
The Pending Home Sales Index, from the National Association of Realtors, measures the number of sales contracts signed each month. It rose 6.3% in December to 87.7, after dropping 4% in November to a record low of 82.5.
The index was 2.1% higher than its December 2007 level...
Sales activity gained the most traction the South, where the index jumped 13% in December. The Midwest was also much higher at 12.8%. The Northeast, however, slipped by 1.7% and the index in the West fell 3.7%.
Home sales also benefited from a drop in mortgage interest rates during the month. The 30-year, fixed-rate loan averaged 5.29% for the month, with the average borrower paying a fee equal to 0.7% of the mortgage principal. That was, by far, the lowest that mortgage rates had been all year...
The lower mortgage rates helped push housing affordability to record levels.
NAR's Housing Affordability index improved to 158.8 in December, up more than 29% year-over-year. That makes buying a home more affordable than any time since NAR started tracking the measure in 1970.
A household earning the median U.S. family income can now afford a home of $277,000, according to NAR. That's well above the national median home price, which was $198,600 in 2008.
Subscribe to:
Posts (Atom)