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.
As a senior citizen, you probably will end up paying property taxes for as long as you are a homeowner. However, depending on the state you live in and often once you hit your 60s (usually around the ages of 61 to 65), you may be eligible for a property tax exemption.
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.
One effective strategy to avoid capital gains taxes is to hold property within an estate until the owner's passing. Upon death, the property receives a stepped-up cost basis, resetting its value to the market value on the date of death. This allows heirs to sell the property with little to no capital gains tax liab.
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.
In California, real property is one of the most valuable assets you can inherit from a loved one. But inheriting real estate that has increased in value over time can trigger capital gains tax consequences when you sell that piece of property.
Do Seniors Get Exemptions on the Sale of Their Homes? Seniors, along with anyone, can receive a tax exemption on the amount of money they earn from selling their home if they meet specific criteria, such as having owned and lived in their home for two years before they sold.
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 it's your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.
Taxpayers 65 and older qualify for an additional standard deduction, reducing their taxable income. The extra deduction amount differs based on filing status and whether the taxpayer or spouse is blind. The IRS updates the deduction amounts annually for inflation, impacting tax filings.
Veterans with a 100% disability rating are fully exempt from property taxes. 70-99% may receive a $12,000 exemption from their property's taxable value. 50%-69% may receive a $10,000 reduction from the property's value. 30-49% may receive a $7,500 exemption from the property's value.
If you do not qualify for the exclusion or choose not to take the exclusion, you may owe tax on the gain. Your gain is usually the difference between what you paid for your home and the sale amount. Use Selling Your Home (IRS Publication 523) to: Determine if you have a gain or loss on the sale of your home.
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.
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.
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.
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.
Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement. If you consider an average retirement savings of $426,000 for those in the 65 to 74-year-old range, the numbers obviously don't match up.
Many people worry about the estate tax affecting the inheritance they pass along to their children, but it's not a reality most people will face. In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate.
It depends on your personal circumstances. If you want to live in the home or use it as a rental property, keeping it obviously makes sense. If you don't want to do either — or if it needs significant work that you don't want to commit to — selling it will make more sense.
Inheritance checks are generally not reported to the IRS unless they involve cash or cash equivalents exceeding $10,000. Banks and financial institutions are required to report such transactions using Form 8300. Most inheritances are paid by regular check, wire transfer, or other means that don't qualify for reporting.