Don't Lose Your Equity to the Tax Collector
WILMINGTON, NC - In this week's Monday Morning Coffee with Buddy Blake from Waypost Realty shares a real-life story about some friends who are weighing selling an investment home or re-renting it. In the current economic environment, don't forget about how Capital Gain Taxes can impact your net proceeds.
Hey everybody, Buddy Blake here with Monday Morning Coffee here in Wilmington, North Carolina. I hope you and your family are doing well no matter where you might be in the world. We continue to see extremely high activity in our area. Wilmington Steel is one of the top places that people are relocating to. I wanted to talk to you about some things that are going on in Wilmington. We have a strange situation. We actually have more homes under contract than we actually have available. I've been doing this for going on 25 years, I've never seen that. And we were having unbelievable low days on market for homes that have actually sold. Okay. That means there's a contract on them and they closed. The average days on market around 11 days for our entire three-county area, that's Brunswick County, New Hanover County, and Pender County. The whole Cape Fear region.
And it is just unbelievable. Now that's houses that have actually sold, not the ones that are sitting on the market because obviously, you have people that are putting their house out there, just testing the market, not really motivated to sell, so they ramp it up 10 or $20,000. And we talked about that in the video last week. If you're going to do that, don't put it in the MLS. You're just going to scar your property and then you're going to end up chasing the market down. But the reason I wanted to talk with you is there was a situation that happened last week. And I want to tell you a little story and these are some great people, they moved out of a house. They got another house and they've got a property that they rented for a year and now it's empty and they're trying to decide, do I want to sell it or do I want to continue renting it?
And so we walked through some conversations because they're going to be up against because of the time they've been out of it, their homestead exemption for capital gains tax. So I told them, I said, "You guys may want to talk to an accountant before you make a decision to put a renter in there or not." In their case, they're going to have close to a $200,000 gain in the property because they've owned the property for a long time. And if they sell it now, in their situation, they should be able to sell it without any tax consequences. But if they wait and they lose that and they get past the two out of the last five years, then they're going to be in a situation where they could at least get hit with capital gains. When there are times of deficits, there's obviously talk about changing or removing the homestead tax exclusion and also increasing capital gains.
Those kinds of things need to be thought about if you've got a house where you got a lot of equity in it, okay? Because I don't know if this opportunity to sell and actually take the equity off the table is going to be there next year. If you want to take your equity off the table tax-free, make sure you talk to your accountant, but really have a conversation and think through that because that can really make a significant impact for you on what you actually get and what your tax consequences are. I don't mean to get complicated with it, but there are things you need to consider other than just the pricing, but you need to be thinking about the timing and things like that. I'd be glad to talk with you about some of those things or points you to an accountant if you're in our area, I'd be glad to make some recommendations on that, but otherwise have a great week.
If we can help you with real estate, we would love to be a resource for you. And also, if you're thinking about getting into real estate, let me know. We have opportunities for you. We're always looking to come alongside other agents in the area or anywhere, to be honest with you. We love networking and masterminding. So if you'd like to connect and be in our mastermind group, just let me know, no matter where you are, we love doing that. So take care, have a great week and we'll see you in a week. Bye.