The Power Of Now

I am not an accountant, nor a tax advisor.  As a residential real estate agent, I know a little about a lot of different tax issues, and how they have changed over the years.  Most importantly, I just want to remind homeowners to ask the questions to their accountants.  Many people are living with old facts, old pieces of information, and misconceptions.  So, even though you may want to move, relocate, buy something smaller, something different, you often stop yourselves when you hear how “bad” the real estate market is.

Here’s some good news.  Let’s remember that over the last two decades, taxes that affect primary residence sales have become really favorable to sellers.  Here are some examples:

    1. Long term capital gains federal tax rates are at 15%; for the state of California the rate is 9.3%. Many of us can remember when these rates were MUCH higher, and who knows if they will stay this low forever?

    2. If you have lived in your home for two of the last five years, you can deduct $250,000 from your capital gain if you are single and $500,000 if you are married.  No federal capital gains tax will be due on that amount.  Before 1997, you had to buy another property of a greater amount in order to qualify for an exemption, but that is no longer necessary.  In fact, you don’t have to buy anything at all.  You can just take your money and enjoy it any way you want.  This exemption is available every two years, not once in a lifetime like it USED to be.

    3. If you have lived in your home for a long time, your property taxes are undoubtedly relatively low.  If you are over 55, and are buying another home of equal or lesser value in Los Angeles County or in a participating county in California, you can move your property taxes with you. 

So, yes, we have seen a drop in property values in the last five years.  But over the last ten, twenty, thirty years, we still have a VERY NICE increase.  If you are thinking that your home is too big, needs too much maintenance, or you are ready for a change, a big view, a smaller condo, or your dream home, don’t put off selling just to “wait for the recovery.”

So what I am saying is this: now is as good a time as any to do what you want to do. No one knows the future.  Find a real estate agent who has been through a couple of cycles, and get some perspective.  Take advantage of the opportunities that this market is presenting…

“Today is the tomorrow you worried about yesterday, and all’s well.”