How to Sell Your Highly-Appreciated Home Tax-Free (or Almost)

With appreciation sky rocketing over the last 10 or so years for most Real Estate, sellers are looking for ways to lower there tax burdens. With tax season upon all of us, everyone is looking for ways to lower our tax burdens. There are a few great practices or changes that can make a homeowner lower the amount owed from highly appreciated properties when the time to sell comes. There are a few options that homeowners have and here are 3 that this article dives into.

1. If it is your permanent residence you can get a $250,000 tax break on the gains if single & $500,000 if you file as married status
- This tax break has a very friendly clause that you only have to live in this residence for the last 2 of the 5 years
- Along with this clause is another item that you only have to live in the residence for 2-3 weeks/ year to meet the requirements

2. Covert the residence into a rental property and sell it at fair market value (FMV) into a business structure that you own. A good choice is a limited liability company (LLC).
- The tax free exclusion still remains for this property when you sell
- This property becomes a source of income that can be loaned against if needed
- You still get the benefit of appreciation

3. Because the LLC paid FMV allows for the "step-up" in basis
- One of the largest benefits of real estate is the depreciation factor. Because the LLC owns the property, the government looks at it as loosing value and allows for depreciation. If it is a commercial property you can depreciate it over 27 years and 39 if it is residential.

These are some very good tips that can save homeowners lots of money when it comes to the tax burden of estate appreciation.

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