You are contemplating selling your Maine home and wonder, okay, are worried sick about the tax consequences.
Is there is tax on the profit from your Maine home?
I always start these kind of "it depends" conversations adding the disclaimer to get more details, consult with your tax professional.
But here is the reader's digest version for what it's worth.
There are variables like anything addressed by the tax code so I'll take the liberty of creating a situation. And you can hum along, see if this is the tune you are singing, that applies to you.
The Maine home you are asking about is your primary residence. You purchased it several years ago thus ching ching, a profit is in the wind (if marketing Maine property, priced realistically and marketed aggressively. Shameless plug for Mooers Realty, moi.)
If you sell in 2012, pretty favorable tax treatment happens due to legislation enacted back when Bill and Hillary Clinton were entertaining in the White House.
Maine home owner taxpayers can exclude as much of $500,000 of the primary residence house sale gain if married. In Vacationland, our Maine homes are way way cheaper so not hard to get under this property listing selling limbo pole. Without hurting your L3 or L4 in the hokey pokey.
If you find yourself single at sale time, your taxes for the year will have a maximum exclusion of $250,000. Keep him or her happy. Date your mate. Double that exclusion if there is marital harmony in that Maine household with the for sale sign in red, white and blue out front.
Again, remember we are talking property tax exclusions on the profit, not sale prices. Start adding up the receipts, doing the math to calculate your basis of what it was bought for and the bottom line on the HUD 1 that shows what size check is due the seller. That's you the owner of this just sold Maine home.
Hop up on the paper covered table, turn your head and cough.
Because some fine print applies to take the maximum exclusions allowed under the tax code law. You must have owned, used the residence as the primary roof over your head for at least two of the five years. Prior to the sold sign rider being screwed on that silent salesman out front.
If that last quiz was flunked, if you did not pass the test, you still might qualify for a reduced exclusion.
Usually tied to a change in where you work, health reasons, or other out of your control, unforseen circumstances. Study the tax codes, talk to your bean counter or CPA.
Study up on the Internal Revenue Tax Code Publication 523 for all the fine print details. Maine, easy state to find low cost real estate, hang on to some of the profit when you decide to sell and move up to something bigger. With more land, on the Maine waterfront. We can help you in those Maine property buying, selling situations.