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Consider Getting Contract In Before Dec 31 2017 If You Are Selling Your Home
With the new Tax law, some home sellers need a sale contract written before the end of 2017 in order to avoid a big tax bill that would be imposed if the Congress' tax reform proposals become law: Both the House and Senate bills require sellers to have lived in their residence for a longer period of time before qualifying for the capital gains tax exclusion on the sale of a primary home.
As proposed, owners must live in their house at least five years out of the last eight; currently, the requirement is two years out of the last five.
The Senate version of tax reform includes an exception for transactions in which a contract is written before Jan. 1, 2018, even if the closing occurs later in the year. If that exception makes it into a final bill that both the House and the Senate pass – and the president signs – any seller with a contract in hand by midnight on Dec. 31 would be safe.
However, the bill passed by the House includes no such exception. As a result, homeowners who hope to sell but have lived in their current home less than five years only have a month left to complete a deal before the proposed tax changes would take effect should the House's take on capital gains taxes become part of the final package.
Should either version make it into the final bill, short-term homeowners who sell in 2018 would no longer qualify for the capital gains exclusion, which covers up to $250,000 for an individual and $500,000 for a married couple. As a result, the difference between these home sellers' tax bill pre- and post-tax reform could be huge.
It won't be known whether the House or Senate version of tax reform is adopted until the bill is finalized, which could happen in a few weeks. But sellers who haven't lived in their house for more than five of the last eight years will want to act quickly regardless of the version that is approved, according to the National Association of Realtors®.
Kimberly Maxwell, a fourth generation in Walton County, knows the community and its wonderful lifestyle firsthand. Although she was born in NYC, moved to NC in her high school and college years, her m....