In a year where the market has been hotter than ever, more and more people are selling their homes — and they’re not always buying a new one right behind it. So, as they check that box that says, “I sold a house,” how can they prepare for any (expensive) surprises that might head their way on April 15?
By Heather Bien | January 24, 2022
Don’t hesitate to call in a professional. These expert tips are helpful and it’s a good idea to come to the table with ideas, but Kate Ziegler, a real estate investor and Realtor in Boston, advises would-be real estate investors to call on a tax professional early in the process. A certified public accountant, or a CPA, with real estate experience helped her structure existing properties in a more advantageous way. They also advised on future purchases and sales, and how those might impact her tax bill.
“Take the time to find someone who understands both your local real estate market, and also your goals, whether you’re investing on a larger scale or minimizing capital gains on a well-timed sale of your primary residence,” Ziegler says.
Historically, people were told to buy a home only if they planned on living there for three to five years. The pandemic changed everything. People found themselves in need of more space, moving across the country, or selling to cash in on a hot market. They needed to sell — and they needed to sell now. How long they’d been there didn’t matter.
Some of those sellers found themselves with a surprise tax bill. “In some markets, there are additional taxes levied for selling within the first year of ownership, where municipalities are trying to discourage “flipping” or revitalizing depreciated homes for short-term re-sale,” Ziegler says.
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