With the new tax law’s many changes, Seniors are asking:
“Will I have to pay taxes when I sell my house?”
Having living in the same house for decades, Seniors’ home value has risen substantially.
Many people, not just Seniors, are surprised to realize there are tax implications when a primary residence is sold.
In order to keep the exclusion from capital gains taxes on your primary residence, a decision to sell or not sell needs to be made within a few months. Seniors who have moved into an independent living community or moved in with adult children must pay attention to these rules to keep Uncle Sam of your wallet.
You or your spouse must have lived in your home for at least 2 of the last 5 years. Living off and on is allowed as consecutive years are not a requirement. Temporary absences do not disqualify you from this receiving exclusion ($250,000 for unmarried persons; $500,000 for married couples). If you haven’t met this residency requirement due to health reasons, you may still get to use this exclusion upon the home’s sale. Get a letter from your physician documenting your need to move into a care community; and it if the IRS has questions.