While this example is not about a commercial property, we advocate taking advantage of market conditions to obtain the best deal and right now, it is a great time to buy residential real estate that you plan to hold until the market returns.

One of the greatest benefits to homeownership can be that the profit made on the sale of your principle residence is excluded from taxes.  Plus, you can also include the sale of adjacent land tax free or use this tax break over and over for additional tax free gains. How?

As long as you have owned the property for two years and have lived in the property two of the last five years, the IRS allows capital gain exclusion of up to $250,000 if you are single or up to $500,000 for a married couple filing jointly.

In addition, this exclusion can also be applied to up to 29 acres of vacant land next to your home.  As long as the land has been used as part of your principle residence and is adjacent to the parcel that contains your house, the exclusion can still apply, even if the land is sold in a separate transaction from the sale of the home as long as those transactions are within two years of each other.

So, you can take advantage of this tax-free gain and use it to buy your next real estate purchase.

Should you be in the market for a luxury home, click on the video below for a Virtual Tour of an exquisite home featuring Green Building in The River Club in Suwanee, Georgia that is priced at $2,650,000.

If you are interested in new luxury homes in the Metro Atlanta area click here for homes available or click here for pre-construction specials.

There is a unique window of opportunity that exists in the market now that allows you to buy a home for up to $300,000 less than the normal price in a typical market.  This allows you to create instant equity in the property.  Then, if you live in the home two years and sell when the market returns, the entire gain can be tax free.

Filed under: Benefits of Owning Property, Save Tax