by Katie on June 19, 2013
A common question for sellers is if they will owe capital gains tax when they sell their home. The answer to that question: it depends. The capital gains tax law known as the Taxpayer Relief Act went into effect in 1997 but there is still a lot confusion over who pays what and why.
If you sell your home you will not have to pay capital gains tax if:
- You are selling your personal residence.
- You have $250,000 in profit or less if you are single and $500,000 if married.
- You have lived in your home for two of the last five years.
- The home is not an investment property.
The capital gains exclusion can be used as many times as you like as long as it meets all of the above criteria.
If you are going to make more than $250,000/$500,000 in profit you will be taxed at a 20% capital gains tax rate on the amount over the $250,000/$500,000 threshold.
There are exceptions to the rule. You may be eligible for a tax break if:
- You need to sell your home because a change in health.
- You need to sell your home because of a long distance relocation.
- You are in the armed services and moved to fulfill your service commitments.
Your individual tax situation may be different, so make sure to consult a qualified tax accountant or attorney.
by Katie on June 12, 2013
It is almost impossible to predict the future and predicting where mortgage rates may go can be difficult too. But if you know how to watch the indicators you will have some degree of advantage. It may help you decide whether to borrow funds or wait until rates drop.
Consider that with any prediction there can always be a great deal of margin of error. Here are a few things to consider to make a more reliable mortgage rate prediction:
History
History can always be a good predictor. What is the economic climate? If rates are high in economic down times that you should predict that rates will rise when the same crisis hits the market.
Look not only to long-term history but also to rates recent history. Watch for the changes carefully, track them by the month. Factors to consider are: Are the rates going up or down? What factors are causing them to behave in such a way?
Influencing Factors
Factors that influence mortgage rates can be controlled by you. One of those factors is the amount of down payment you have or if refinancing the amount of equity you have in the home. Also for consideration on the rate you will receive is your debt to income ratio and your credit score. Some factors you cannot influence include the state of the real estate market, the inflation rate and the funds available for consumers.
Inflation
Inflation drives most everything and always is a constant consideration of the mortgage interest. If inflation is higher, the interest rate will go up as well. Conversely, if inflation is low rates do down.
Credit Availability
How much credit is available? If limited funds are available than mortgage interest rates will be higher.
The Bottom Line
The bottom line is you have to be flexible. You can never predict what the exact mortgage rate will be. Instead, look to the factors that influence rates. This will give you an idea of where rates are and a better picture of if it is the right time for you to take on a mortgage.
A common question for sellers is if they will owe capital gains tax when they sell their home. The answer to that question: it depends. The capital gains tax law known as the Taxpayer Relief Act went into effect in 1997 but there is still a lot confusion over who pays what and why.
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