Real estate in the Capital Region is booming, rental prices are increasing and homes are selling at record highs. The local market inventory levels are still low which is resulting in local homes and apartments seeing an increase in value. Depending on your living situation it may be a great opportunity to take advantage of the skyrocketing market. Selling your home in the current environment could see a nice profit for you that may end up being tax free if your gain is below the allowed limits (more on this below). Those gains could go a long way towards a new home or to pay for rent if you want to wait for the market to cool down a bit.
Rising costs have yet to stabilize for Homebuilders which is causing them to have to pass these increases on to the consumers, thus increasing the cost of building a new home. It has also slowed the production as these cost increases are due to a shortage of needed supplies. If you are planning to build your new home, you will want to plan for these increased costs and the time delays in advance. This can help you be more confident that you will have the house construction completed and all costs covered by the date that you were looking to move in.
There are a few things to keep in mind when selling your home. The IRS allows you to exclude a gain from your taxes when you sell your main home. To qualify for the maximum exclusion of gain ($250,000 for single filers and $500,000 if married filing jointly), you must meet the Eligibility test. If you owned your home for a least 2 years of the previous 5 years leading up to the date of sale, you meet the ownership requirement and qualify for the exclusion. However, if you already sold a home in the past 24-month leading up to the sale of your current home you may be ineligible to exclude the gain on your current home from your taxes.
If you have any questions, or would like to discuss your specific situation, please contact your trusted TBC advisor.