How to Acquire Wealth Through Capital Gains Exclusions

Using capital gains exclusions is a useful way to acquire wealth through real estate.

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In the state of California, if you own a house for less than 24 months, you’ll be hit with a short-term capital gains tax and all of the capital appreciation you’ve accrued will be taxed for as much as 34% or higher based on your tax bracket.

Because of that rule, it’s very important that you understand how to take advantage of capital gains exclusions (or IRS Code: Section 121).

First, you must understand the ownership principle of capital gains exclusions, which states that you must have owned the house as a primary residence for at least two of the last five years you’ve owned the property.

This is one of the secrets of how high net-worth individuals accumulate a lot of cash using real estate as a vehicle.

The second thing to consider is the frequency of using capital gains exclusions. This is something you can do every two years. For example, if you buy a house, wait 24 months, and then sell it for—say—$400,000, you can get an exclusion for that entire sum if you’re a married couple. Remember—married couples can exclude up to $500,000, while single persons can only exclude up to $250,000.

You can then defer your taxes, roll that into your next investment property, and start the process all over again.

If you have any questions about this strategy or any other real estate topic, please don’t hesitate to reach out to me. I’d be happy to assist you.

3 Things to Consider Before Listing in Silicon Valley

When preparing to sell your Silicon Valley home, consider these three things carefully first.

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If you're getting ready to list your home on the market, there are three things you must consider first.

1. Where to start with renovations: Research from the National Association of Realtors shows that renovating bathrooms returns 58% of the value you invest in them, and a new roof can return 105% of the value invested.
2. Paint: Zillow states that painting your kitchen yellow returns $1,400 more than a white kitchen and that lavender dining rooms return $1,122 more than a white dining room. It's an easy way to put a little more money in your pocket when you sell your home.
3. Technology: Because of the area we live in, smart home technology is very attractive to buyers. Some of the best ideas are cheap fixes that add a ton of value, like a Nest thermostat, Amazon Echo for the sound system, and a door lock for all the doors.

If you have any other questions about preparing your home for the market or the Silicon Valley market in general, don't hesitate to give me a call or send me an email. I'm always happy to help!

Why Selling FSBO Doesn’t Make Sense

Selling your home on your own isn’t the best idea. You might save the 6% in commission, but you’ll give up a whole lot more money elsewhere.

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Why should you hire a real estate agent as opposed to trying to sell your home on your own? There are three specific reasons that we would like to share. You may think it’s a good idea to sell your home FSBO (For Sale By Owner), but here are three reasons why it’s not:

1. FSBO homes fail 75% to 95% of the time. Those that end up selling are sold for a fraction of their true value. The NAR stated last year that homeowners have lost an average of 17% on their sale prices because they are trying to save 6% on commission.

2. Owners aren’t agents. In terms of preparing and marketing the property for sale, showing it, and negotiating the best deal possible, it’s a full-time job. Most homeowners don't have that kind of time to dedicate to a sale.

Hiring an agent saves you time and money.

3. It saves you time and money.

If you have any questions for me about selling your home or anything else related to the real estate market, I would love to hear from you. Give me a call or send me an email today. I look forward to hearing from you.