For current homeowners who see this as a possible problem when they decide to sell, Lieber has a suggestion: There's a "small pile of paperwork" they should begin filing away now – paperwork for all the improvements they've made to the property, because those costs count against the gains when it's time to sell.
Since even a single remodeling can offset the gains by many thousands of dollars, the savings when it's time to sell can be substantial.
Currently, Zillow estimates that 3.8 percent of U.S. homes nationwide are now in the tax zone for single people, and 1.2 percent of married couples have reached the threshold.
However, the number of people affected is much higher in expensive cities, such as San Francisco and New York.
"The Bible for all of this is Internal Revenue Service Publication 523: Selling Your Home," says Lieber. On page 12, homeowners can find the IRS-approved list of things that can be subtracted from a gain to determine whether it's below or above the $250,000/$500,000 limit.
Source: New York Times (06/06/15) Lieber, Ron
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