Understanding Capital Gains When Selling a Home in the Western Chicago Suburbs

If you’re selling a home in the Western Chicago suburbs, understanding capital gains tax is essential. Here’s what you need to know:

What Are Capital Gains?

Capital gains are the profits from selling your home for more than you originally paid. For example, if you bought your home in Wheaton for $300,000 and sold it for $450,000, your capital gain is $150,000.

Exemptions for Primary Residences

The IRS allows homeowners to exclude up to $250,000 of capital gains if you’re single, or $500,000 if married filing jointly. To qualify, the home must have been your primary residence for at least two of the last five years.

Tax Rates

Capital gains tax rates depend on your income and how long you’ve owned the home. Long-term gains (for properties owned more than a year) are taxed at lower rates than short-term gains.

Tips for Sellers

• Keep Records of Improvements: Expenses for renovations and upgrades can reduce your taxable gains.

• Consult a Tax Professional: They can help you navigate specific rules and maximize your savings.

By understanding these basics, sellers in the Western Chicago suburbs can make informed financial decisions and avoid surprises at tax time. If you're an investor looking for properties in Chicagoland's western suburbs, I would love to be a no-pressure resource for you! Please reach out with questions and for potential opportunities. We are a top 1% team serving Wheaton, Glen Ellyn, and greater Chicagoland.