Some Tips on How to Save on Taxes
{Provided by Scott G Harrison Professional Bay Area Realtor since 1987
Scott Harrison
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Tax Tips When Planning a Sale
The Federal Statue allows owners of any age who has lived in the property for any 2 year period during the last 5 years to sell capital gains tax exempt for the first $250,000 for single & $500,000 for married couples.  You  may be allowed to do this several times so long as you meet the guide line.   Remember the over 55 once in a life time $125,000 exemption from capital gains on the sale of your principal residence rule has been replaced and no longer applies.  Any tax advise should come from your CPA or accountant who knows your specific financial circumstances.

Have not lived all the 2 years yet? There is exception to the 2 year rule for job transfers, military orders and other circumstances for which prorations are allowed.  As with all advice on this page you should consult a CPA or Lawyer before you take action.  Your specific circumstances have not been taken into consideration on this page.


Thinking about moving but don’t want to lose you're (Prop 13) property tax basis? If your over 55  years of age you can transfer the property tax basis in California under Proposition 60 , 90 and 110 on your principal residence so long as you buy for less than what you sell for within your own county or as of 5/5/2010  one of these participating counties: Alameda County, Kern County, Los Angles County, Modoc County, Orange County, San Diego County, San Mateo County, Santa Claira County, or Ventura County.   Print the PDF form from this link For more information on the over 55 property tax transfers call Scott Harrison 510-728-6467 or the Alameda County Assessor at 510-272-3787. 

Property Transfers in Alameda County between parent and child of a principle residence may be excluded from change in ownership reassessment.
In other words you can keep the property tax assessment amount and not be reassessed at market value or sold price.   First you must file a claim and certain requirements must be met. To review limitations and exclusions go to County Web site.

What is Stepped Up Tax Basis?  Take what you paid for your home add in improvements to get Bases.  An  example of stepped up basis lets say you  bought 1967 for 50,000 one party died in 2000 when the value was 500,000. the surviving inherits their spouse 1/2 share at the value of 250,000 add this to 1/2 what she paid means their stepped up tax basis is now $275,000. They added a new roof and remodeled the kitchen for $35,000 and now they have $310,000 into the property. The net from the property sale in 2005 is $650,000 and subtract the cost basis equals a capital gains tax of $340,000 less the exclusion for owner occupying of $250,000 and they pay the Federal capital gains on $90,000

Bought or refinance a mortgage loan transactions after December 31, 2014 with less than 20% down?  On December 18, 2015, the President signed legislation that renews the tax deductibility of mortgage insurance (MI) premiums or (PMI) Private Mortgage Insurance for qualified borrowers through 2016.  This would include FHA loans and many conventional loans.   You may qualify for tax deductibility on federal tax returns as follows:  If you have an adjusted gross incomes below $100,000 may deduct 100% of your MI premiums.  If you have an adjusted gross incomes from $100,000.01 to $110,000, deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income.

Property Tax Postponement - To be eligible, you must be blind, disabled or 62 years of age or older and have an annual income of $24,000 or less. Forms are available from the County Tax Collector. For more information, call the State Franchise Tax Board at (800) 852-5711.
Or    Visit the Alameda County Assessors Pages
Or    Visit the Contra Costa County Assessors Pages

Investors had a handy loop hole in the 1031 tax deferred exchange codes allowing them to exchange out of a rental into a home they hope to owner occupy.  Once they move in they would then sell after a 2 year holding period using the ruling above to avoid $250,000 or $500,000 capital gains tax on a property they acquired from an exchange.  This has changed now, the new codes starting in 2005 says they must hold that newly acquired property for 5 years to utilize the $250,000 or $500,000 capital gains tax exclusion.

Always check with your tax expert to see how this impacts any sale or exchange you're planning ahead of time.


The information on this page comes from a reliable source but may not be current.  Scott Harrison of Coldwell Banker Real Estate assumes no liability for its accuracy but will gladly make changes.  Contact Scott
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