I must be a huge nerd, but I am excited to see a debate spurred by my comments on why purchasing a house to live in, yourself, is not a good idea.
My argument is that if you are a go-getter who doesn’t want to (or let’s face it, if you can’t) miss out on a job or career based on location. If you are single and never know when you might find “the one.” Alternatively, you want to keep your options open for any number of reasons, buying a house can and should probably wait.
It is a big decision.
That said, you may have purchased a house recently and for some unforeseen reason you have to sell it. Bummer. Good thing the IRS will help you out. If you purchased a house in the last five years and have personally lived in it for the most recent two years, then you will not be taxed on any capital gains up to $500,000 from the sale of the house. That is correct, any amount up to $500,000 sold above your original purchase price will not be taxed so long as you meet this requirement.
If you have owned the house for longer than a year but did not meet the above criteria, it is considered a long-term investment and you will most likely pay 15% in capital gains tax. You will likely pay over 20% in capital gains tax if sold within the first year – another consideration for fix and flips (which is open for a guest post if there are any takers, it is not my knowledge area but is another way to optimize your free time and earn income on the side).
Another safety net is if you lose money on the sale, the capital loss is tax deductible.
It is probably a good thing that I find these tax topics so interesting since I am starting my Masters in Taxation in a few weeks. I hope to be able to keep up with this blog, there will be tons of ground to cover. Not only on tax topics – that would make for a dry blog – but on managing life when working full-time, obtaining one (or another) master’s degree, managing my side businesses, maintaining a restrictive diet for autoimmune disease, and, yikes, family planning.
My intention for this blog is to interview or have guest posts from people who are rocking their career and taking life by the horns. Those of you who are honing your craft, blazing trails in various aspects of life, and considering the legacy you are leaving behind.