It’s only 5 weeks until the end of the year. I think it unlikely that you will get an offer, accept it and get through all the paperwork to complete the sale before January 1, so which year is not likely to be relevant. The sale will close in 2025.
There is a pretty substantial capital gain exclusion if (I believe) it has been your main residence for two of the last five years. The exclusion is larger for married couples. An internet search will get you the details.
If the capital gain is lower than your exclusion, then it matters not at all which year you sell the home, no additional tax either way. If you are going to have to pay some extra capital gain tax, it would be better to close the sale next year. You would not have to fork over the tax until April 2026.
If you are already required to pay quarterly estimated tax, then the additional capital gain tax technically should be included in that quarterly estimated tax payment, in which case again, it really doesn’t matter very much which year you sell. Either way you pay the tax at the end of the quarter in which the sale closes.
Advice from this seriously burned out, career-choice regretting, 28-years-of-experience CPA is that there are way too many variables to give a meaningful answer without quite a bit more information.
That being said, I agree with the first part of the above advice. It is not all that likely that you could close the sale this year. It can be done and has been done, but usually takes longer than that.
>>...from this seriously burned out, career-choice regretting, 28-years-of-experience CPA...
On a bright note, you got paid decently. I have about the same amount of time in as a school teacher (with a Master's degree and two certifications,) and it's only within the last year or so that I feel that I can do more than just pay my bills. That's why I'm hanging in there despite being at retirement age. For the first time in my life, I'm earning decent money.
Edited 1 time(s). Last edit at 12/01/2024 06:17PM by summer.
My wife retired from teaching at the end of the 2023/24 school-year. Her primary motivation was to get away from a toxic narcissist in her grade level. After nine years of that nonsense, there was no capacity for a tenth. Otherwise, I think she would have stayed for another two or three years.
Right now I'm in a really great position -- terrific school, principal, kids, and colleagues. That's really rare in any school system much less my urban school system. So that's a part of what keeps me in. At the same time, my age is showing. I get just a little more tired every year. But I'll stick with it for now.
Selling your home isn't a spare of the moment deal.
Get good advice from your realtor about the market and how quickly will it sell. Generally spring is a better time, as young families don't want to disrupt kids school situation.
Also get advice from your financial advisor, they know your financial situations and can help guiding you the sale and tax advantages.
Will you be purchasing a replacement residence soon after selling? I believe that most any type of real estate purchase (not an RV or a live-abord boat/yacht) without land) will offset your cap gains
Edited 2 time(s). Last edit at 12/01/2024 10:02PM by GNPE.
Postponing capital gains tax by buying another piece of similar property only applies to the sale of investment/rental property. It does not apply to principal residence.
The principal residence exclusion only applies to principal residence, not to second homes nor to investment/rental property.
If your property could be considered principal residence or rental property, then you need professional advice. That’s above our pay grade. :)
ETA: that’s know as a 1031 exchange, if I recall correctly. You can look up the details online.
Edited 1 time(s). Last edit at 12/01/2024 05:37PM by Brother Of Jerry.
Agree w/ burned out apostate, but essentially lived in and owned 2 of last 5 years, exclude 250k gain if single, 500k gain if married. Sec 121 exclusion.
So far, the advice given here has been accurate. My experience has been that it doesn't usually work out that way in the off-topic-on-an-internet-forum world.
Depends on your sale price and nothing to do with the end of the year. Take your time and find a right buyer to maximize your gain. If you're single, you can avoid the first 250k of profit, married, 500K. You can also place the house in a trust before you sell and possibly avoid any tax liability. There's a million tricks out there and the reason that the rich get richer. They pay the guys that know the rules. Do your research and slow down.