How to Exempt Yourself From Paying Capital Gains on Equity

Today I am explaining the requirements for a capital gain exemption and a 1031 exchange.

Want to Buy a Home? Search All Homes
 Want to Sell a Home? Get a Home Value Report

In this market, where properties carry a lot of equity, it is important to know everything you can about real estate investments. To help you out, I want to talk about capital gain exemption rules and 1031 exchanges with you today.

To start with, I will explain how capital gain exemptions work.

If you have lived at least two of the last five years in your current home, any equity you have built during that time can be claimed as tax-exempt gains. For married couples selling their home, this amount can go up to $500,000. A single person, on the other hand, can claim up to $250,000. You can even qualify for this exemption if you rented out your home for three of the years, as long as you currently live in the residence.

If you have already made a capital gain exemption,
you can still qualify if you have lived in your
current home for two of the last five years.

So, if you're thinking about selling, this exemption can save you a lot of money. 

And through a 1031 exchange, you can defer all capital gain taxes if you are thinking about selling your current investment property to reinvest the funds into a new one. Of course, this exchange doesn’t apply to primary residences. It must be done with investment properties.

If you have any questions about this, or if you are interested in buying or selling, please feel free to reach out to me. I look forward to speaking with you soon.

Why Price Reductions Aren’t the Beginning of an Overall Trend

Though we’ve seen some price reductions in our market, prices aren’t dropping overall.
Here’s why.

Want to Buy a Home? Search All Homes
 Want to Sell a Home? Get a Home Value Report

We’ve seen a lot of price reductions lately in our Santa Clarita area, but does that mean the market’s leveling downward as a whole? We don’t believe so, and here’s why.

Most of these price reductions happened with listings whose sellers tried pricing their homes just ahead of the pace of the market while it was at an incline. For example, during this time, one of these sellers might’ve priced their home at $525,000 if they saw that the last home in their neighborhood sold at $500,000 and they thought theirs was better.

Most of these price reductions happened with
listings whose sellers tried pricing their homes
just ahead of the pace of the market.

As our market’s leveled out a bit, the excess demand for standing inventory has also leveled out. Now when we see that $525,000 home selling at—say—$510,000, what might look like an overall trend is actually the case of a seller reducing their price to a point that it should have been at all along.

If you have any more questions about our Santa Clarita market or you’re thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’d be happy to help you.

A Closer Look at the Santa Clarita Real Estate Market

The Santa Clarita real estate market is starting to change. Here’s what you need to know.

Want to Buy a Home? Search All Homes
 Want to Sell a Home? Get a Home Value Report

We’ve been seeing some changes lately in the market, so today we wanted to highlight a few things that you need to pay attention to, both in Santa Clarita and in the nationwide market.

Inventory is starting to rebuild, which we haven’t seen in a long time in Santa Clarita. Over the last five to eight years, we were hovering in the range of 300 to 500 homes as far as inventory was concerned. Right now, we have about 650 active homes on the market. At the same time, 330 homes have sold in the last 30 days, so the market is still healthy and normal.

As our inventory rebuilds, and should interest rates continue to tick up, this will knock out purchasing power for certain buyers. At this point, there’s only one thing for sellers in the market to do: be more competitive. In most cases, if the buyer pool starts to thin out, sellers need to be more competitive. Homes just aren’t selling as quickly as they have been.

Homes that are priced right are still selling
quickly and with multiple offers.

In addition to this, we are seeing homes that are upgraded and priced right moving quickly and often selling with multiple offers. A lot of “experts” are saying that the market is going to start pulling back in the next year, while others are saying that we have another five to seven years of growth because of the economy.

At this point, we won’t know if the market has pulled back or not until three months after it has happened. What we do know is that it’s always important to have a game plan in place. Whether that is using the equity in your home to invest, possibly moving out of the area, upsizing, downsizing, and what options you have and what upgrades you can do.

No matter what your situations is, we’d love to work with you to develop a game plan. There’s no reason to panic right now, but it’s always important to have a contingency plan. If you have any other questions in the meantime, don't hesitate to give me a call or send me an email anytime. I look forward to hearing from you soon.