Article originally published by CNBC.com.
Written by Kate Dore
“If you recently made a profit selling your home, it may come with a costly surprise this filing season: capital gains taxes on your windfall.
In 2021, the average U.S. home seller scored a profit of $94,092, up 71% from $55,000 two years ago, according to ATTOM, a nationwide property database.
While many sellers’ profits fall under the capital gains thresholds for primary homes, others may get hit with an unexpected bill, particularly long-time property owners, experts say.
Home sales profits are considered capital gains, levied at federal rates of 0%, 15% or 20% in 2021, depending on taxable income.
The IRS offers a write-off for homeowners, allowing single filers to exclude up to $250,000 of profits and married couples filing together can subtract up to $500,000.
But these thresholds haven’t changed since 1997, and median home sales prices have more than doubled over the past two decades, affecting many long-term homeowners.
“It’s become a huge part of the conversation now,” said John Schultz, a CPA and partner at Genske, Mulder & Company in Ontario, California.
While the exemption may be significant for some homeowners, there are strict guidelines to qualify. Sellers must own and use the home as their primary residence for two of the five years preceding the sale.
“But the two years don’t have to be consecutive,” said Mary Geong, a Piedmont, California-based CPA and enrolled agent at the firm in her name.”
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Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.