hey guys welcome back I'm Jeff Smith
Coldwell Banker Residential Brokerage
here in Huntington Beach California and
today I'm addressing the question of are
there property taxes when you sell a
property and so it all depends on what
type of property you're selling and how
much equity you've gained in a certain
period of time whether or not you're
going to pay taxes on that property when
you sell it so I'm gonna give a couple
of examples to help guide you through
this process and hopefully make it a
little bit easier so you know for topic
of conversation for the video we're
gonna have your primary residence and
we're gonna have an investment property
right so we're gonna talk about an
investment property first because it's a
little easier to address so when selling
an investment property
if you sell that property and you have a
gain on it there are essentially capital
gains you'll pay on the on the equity
that you've gained in that property
unless of course that you do a 1031 tax
exchange where you take that gain that
equity that you've made on that property
and roll it into a nother property of
higher value of like kind etc so I'll
link to what a 1031 is below to give you
better guidance on a 1031 to help you
know kind of guide you through that
process if you're not familiar with it
but with 1031 you're more likely to pay
tax on it if you're not rolling it into
something else then you are say a
primary residence so for now we're gonna
talk about primary residences and a
primary residence for topic you know
again for this video we're gonna say is
something that you've lived in two of
the last five years so if you've lived
in a property two of the last five years
it's been your primary residence for
that period of time then in the state of
California you have a capital gain
exemption when you sell that property
and so and I'll link to a capital gain
video again below to give you more
information on what capital gains are if
you're not familiar with capital gains
but to help guide you through that
process as well but for you know for a
primary residence if you're an
individual and you've lived in that
property two of the last five years and
we're going to assume that you haven't
sold another primary residence within
the last two years because if you've
sold a property within the last two
years then essentially if you go to sell
another primary residence there could be
potential tax consequences associated
with that but if you've lived in this
property you haven't sold one in the
last two years and this is your primary
residence as an individual you have up
to $250,000 that is tax-free
it's a exemption on capital gains that
you can't be taxed on that 250 and if
you're married that goes up to 500,000
so you have up to $500,000 that is
tax-free on the on the B cell of your
property so an example would be if you
brought a property for say 400,000 and
let's say now it's worth a million bucks
you've lived there for for two of the
last five years when you go to sell that
property and let's assume you're married
you're gonna have $500,000 that is
tax-free so you bought it for 400 you
sell it for say a million so that 400 to
900 is $500,000 in gain that you can
walk away tax-free that additional
hundred thousand is there there's some
potential tax consequences there right
but keep in mind you can write off
realtor commissions you can write off
there's certain expenses that you can
write off home improvements that you've
done to the property those are things
that you can write off when selling that
property so out of that additional
hundred thousand that you have there
there may be less than that that you'll
actually write off based on the things
that I just mentioned now keep in mind
I'm not a tax accountant as you probably
know I'm not a CPA by any means so if
you're going to sell your property you
have tax questions consult a
professional in that field because they
can guide you through the process
they'll be a better you know there'll be
a someone better to talk to with regards
to your tax questions and really give
you the guidance that you need versus
say a real estate agent just kind of
talking off the cuff about the subject
so don't rely on my information consult
a tax accountant if you are considering
selling your property and you have tax
questions so you know that I hope that
is helpful in in in kind of giving you
the difference in the two and telling
you whether or not there are actually
tax consequences because it's not as cut
and dry as just saying hey yes there are
or no there aren't I would say in the
majority of cases where it's your
primary residence you know at least in
my experience there are less taxes
associated with that sell then say with
an investment property when you go to
sell that property now keeping
mind if you have an investment property
and it's been an investment property if
you move into that investment property
to for you know for two years then you
can actually say that's your primary
residence and then that could be a sell
of a primary residence and you could get
that capital gain exemption so there are
ways to kind of work around there when
you have an investment property and so
on and so forth but you know if you have
additional questions about selling a
property taxes you know 1031 tax
exchange is capital gains any of that
stuff do me a favor comment below would
love to address them as always I
appreciate you taking the time to watch
and we'll see you again soon have a
great day bye bye