Current tax law does not allow you to take a capital gains tax break based on your age. In the past, the IRS granted people over the age of 55 a tax exemption for home sales, though this exclusion was eliminated in 1997 in favor of the expanded exemption for all homeowners.
Sale of your principal residence. We conform to the IRS rules and allow you to exclude, up to a certain amount, the gain you make on the sale of your home. You may take an exclusion if you owned and used the home for at least 2 out of 5 years. In addition, you may only have one home at a time.
The proceeds from a home sale can be used in a variety of ways. With up to $500,000 available tax free, you could use the money to make a down payment on another home, pay down problematic debt, increase your stock portfolio or implement strategies to improve your retirement plan.
Who qualifies for 0% capital gains in 2025. Starting in 2025, single filers can qualify for the 0% long-term capital gains rate with taxable income of $48,350 or less, and married couples filing jointly are eligible with $96,700 or less. However, taxable income is significantly lower than your gross earnings.
A capital gains rate of 0% applies if your taxable income is less than or equal to: $47,025 for single and married filing separately; $94,050 for married filing jointly and qualifying surviving spouse; and. $63,000 for head of household.
Social Security and capital gains
Keep in mind that up to 85% of Social Security benefits can be subject to tax depending on your overall income, including capital gains. The calculation that determines how much of your Social Security benefits are taxable includes realized gains.
The real estate scenario applies to all adults, and it's worth reiterating that there are no age-related exemptions from capital gains tax. The over-55 home sale exemption was a tax law that allowed over 55s to claim a one-time capital gains tax exclusion on the sale of their home.
After you pay off any mortgages or liens on the house and pay the government for any capital gains or other taxes and pay off your realtors and lawyers (if any), you can do what you like with the remaining funds.
A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.
1. Senior Citizen Homeowners' Property Tax Exemption. The Senior Citizen Homeowners' Property Tax Exemption is available to homeowners who are at least 65 years old and meet certain income requirements.
By properly deducting eligible closing costs and major improvements, you reduce your capital gain, potentially lowering your tax liability significantly.
The capital gains exclusion applies to your principal residence, and while you may only have one of those at a time, you may have more than one during your lifetime. There is no longer a one-time exemption—that was the old rule, but it changed in 1997.
Taxes aren't determined by age, so you will never age out of paying taxes. People who are 65 or older at the end of 2024 have to file a return for tax year 2024 (which is due in 2025) if their gross income is $16,550 or higher. If you're married filing jointly and both 65 or older, that amount is $32,300.
Long-term capital gains can't push you into a higher tax bracket, but short-term capital gains can. Understanding how capital gains work could help you avoid unintended tax consequences. If you're seeing significant growth in your investments, you may want to consult a financial advisor.
Understanding the Potential Cost of Capital Gains Tax. Selling a house without buying a house can provide a windfall of cash to the seller. However, the seller could be in for a rude awakening at tax time depending on the circumstances and the amount of profit. This is due to capital gains.
Invest in other types of real estate (aside from primary residences) Save it in a traditional savings account or money market account. Pay down debt like credit cards, student loans, auto loans, etc. Save for another financial goal or personal milestone.
Bottom Line. As rates came down at the end of the summer, sellers started to trickle back into the market, which means buyers have more choices right now. And working with a trusted local real estate agent is the best way to take advantage of your new options before they're all scooped up.
Since there is no age exemption to capital gains taxes, it's crucial to understand the difference between short-term and long-term capital gains so you can manage your tax planning in retirement.
Will my Social Security benefits be taxed? For most people, the answer is yes. These strategies could help minimize the hit on this retirement income source. Social Security was never meant to be the sole source of income for retirees.
At what age is Social Security no longer taxable? Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
So if you have a big capital gain on your current home, and you sell it at age 63 or later, there's a good chance it might cause your Medicare Part B premium to be higher when that year's tax return is used to determine your Part B premium cost.