Your June home connection is here and I sure hope you are out enjoying some of that amazing sunshine we are having!!!
Welcome to 2020 and happy New Year! I hope it will be an amazing year for you and all of us! The infographic you see below is for Washington in a whole. If you would like to see local stats I am also providing you with the stats for Snohomish County and King County.
TAX TIP: The 121 Exemption When Selling Your Home
The reason to do a 1031 exchange is to avoid capital gains taxes on investment property. Almost once a week I get asked about the sale of a primary residence. When you sell your home, you have an exemption from most capital gains taxes. A great resource to get more details about that is an IRS Publication, updated annually, called Selling Your Home (Pub 245). You could go to IRS.gov to download that.
In short, there is a 121 Exemption for capital gains taxes up to $250K per individual or $500K per married couple filing jointly. You do have to have lived in the property as your primary residence for 2 out of the last 5 years, and you can only take this exemption, once every 2 years.
This has been used in a long term strategy to avoid paying capital gains on rentals by converting the property from investment to primary residence. The IRS got wise to this strategy and put some constraints on this.
It could still be part of a plan, but reach out to your tax advisor with questions and see if this is an option for you