Are you sitting on a gold mine?

> Are you sitting on a gold mine? And what will it cost you to cash out on it? In this month’s market update, let’s talk about a good problem to have. This is John Schloz with HomeSmart. Home values have skyrocketed over the last few years. Appreciation over the last two years alone has averaged around 44% . Whenever you purchased your home, you probably have a large amount of equity in it right now. Your home is one of the few assets you can profitably sell without paying capital gains tax. Within limits. As long as you’ve owned the property more than two years, and lived in it as your primary residence for at least 2 of the last 5 years, a married couple filing jointly has a maximum $500,000 of tax free gains. For single people, or married couples filing separately, the exclusion is $250,000. Anything over that will be taxed up to 20% - based on income. Here’s where the problem comes inA median priced home in April 2012 - ten years ago- was $138,000. Based on annual appreciation, that home today may be worth nearly $431,000 - more than tripling in value with a gain of nearly $300,000. If that home is owned by a single person, they would have capital gains tax to pay if they sold the property. Homes purchased only 5 years ago have nearly doubled in value. A $500,000 purchase in 2012 would have appreciated over 1 million dollars in value There is a home in Gilbert that sold new 10 years ago for $533,000 and recently sold for nearly 1.5 Million dollars. That kind of profit is great - paying capital gains taxes on it, isn’t. If you are a homeowner who is reaching their $250,000 or $500,000 tax-free profit limit you might consider selling to take advantage of this tax exemption. You can roll that money into new home and start the equity growth all over again. There are no limits to the number of times you can claim this exemption. The appreciation numbers I’ve mentioned are valley averages. Different areas appreciate at different rates. If you’re curious as to how much your home has actually appreciated, please give me a call and let’s protect your equity from Uncle Sam.