We have only lived in the house for 14 months. We are aware of the 2-year exemption if below x amount. Thanks!
It’s not if below X amount. X amount is exempt; anything above X amount is taxed. And it’s not the house value; it’s the capital gains amount…the profit you sold the house for. Which in this case is going to close to nothing. You seem to be very confused on how taxes work.
They say in the OP they haven’t.
I didn’t realize this until now. Or honestly didn’t really think about it - call it ignorance. I’ve since reviewed the IRS link someone posted below and now get it. Appreciate the comment.
The bumping to a new tax bracket is a myth. Each bracket only affects income over the previous one. Look up marginal tax rates and educate yourself before you do something to hurt yourself.
It’s not even a myth; it’s ignorance.
It’s absurd that you are turning down money because you don’t want to pay a higher tax on the portion of that income. Eg, the highest tax bracket is 400k and you could sell for 430, you’re only taxed whatever the next rate is for 30k of that sale. Even if it’s 50%, that’s 15k you’re walking away from by deliberately staying under 400k.
I am constantly amazed at the number of people who do not understand this. Hell yes I want to be in a higher tax bracket. PLEASE!!!
How will you have any capital gains if you are only asking what you paid in 2023? Even if you get more than asking, the capital gains (the amount you get over what you paid) should be reasonably insignificant.
What we make over asking we would pay capital gains on. Which is why we were thinking to not throw some arbitrary number over asking out there and instead respond asking them to offer what they think it’s worth and to stand out amongst the other offers you can waive some of the typical contingencies and pay the seller agent fees. Not sure if this was the best way to go about it but felt better than just throwing out a random #…
If you pay the agent fee, that would decrease your net selling price, and thus the amount of capital gains. If they pay the agent fee and pay you the lower sales price, you end up in the same spot.
I really don’t even understand the wording of their question. You want to move! I am taking it that they are asking how much should they offer so that you accept and take the house off the market. 5% over asking? WITH APPRAISAL GAP COVERED. Meaning they have to show they have the cash to pay more than what it appraises for and they won’t try to renegotiate. And, inspection for information only. Or no inspection at all.
I really appreciate this thoughtful answer! I get that money is money even if a portion is getting taxed differently. I just thought if we mention the seller fee and waiving the inspection (as you also noted) we would be benefiting. Then let them decide how high to go. I don’t think it would be bad to also provide a % over like you suggested but we just didn’t know where to begin.
I think the question is: at what offer would you just accept the offer and not keep the house on the market.
You tell them you paid so much in 2023 and you are looking at other offers.
They’re trying to get you to name your number first — a number that you can only negotiate down from. Make them name their number first.
This was our approach - you tell us. But also shared with them that an offer would stand out if the inspection was waived or if the seller agent fees were paid.
You want all contingencies waived. This is how a sale can fall through, or a buyer can contractually justify cold feet. You also want an above-asking offer.
You also need a new realtor, or you need to listen to your realtor. That is binary. One or the other.