“Ask Your Attorney” Column
About A Senior Citizen Tax Discount On Selling Their Home
Dear Counselor: My 92 year old mother and 93 year old father are selling their home. They talk about nothing but the amount of tax they think they’ll have to pay since it is worth a lot more today than when they bought it. Do they get a “senior citizen” discount on the capital gain tax on their profit? They’ve had it since 1956!
Dear Client: I admire you for looking after them, and asking – however, the short answer is that there are no special senior citizen tax breaks for gain on a sale after a certain age. But don’t stop there, because there are special rules for everyone on the sale of a principal residence. If a person has owned and occupied their home as their principal residence for at least 2 of the 5 years prior to the date of sale, the first $250,000 of gain for single persons, and the first $500,000 of gain for married persons filing jointly, is excluded from being taxable! So, look at what your parents paid for the home, and then add in the cost of any improvements they made over the last 58 years (such as a room addition, in-ground pool, or the like), and then compare that to the sale price. I know that there has likely been quite a bit of appreciation over the time they have owned their home, but if the net gain is $500,000 or less, it is excluded and none of the gain will be taxable. Now go ahead and give them the good news. If you have further questions, just let us know, and we’ll be happy to help.
John L. Maier, Jr.
Sweet & Maier, S.C., Attorneys
114 Church St.