Summary of Common Tax Issues
IRS Capital Gains
Up to $500,000 in capital gains on your home may be exempt from taxation if it was your primary residence and you lived in the home 2 out of the last 5 years.
IRS 1031 exchange
Gains on the sale of an investment property can avoid taxation if the proceeds of the sale are rolled into the purchase of a like-kind investment.
IRS Itemized Income Tax Deductions
County property taxes and CA income and sales tax deduction is limited to $10,000.
CA Prop 19
Property tax basis on your current CA home may be transferred to your new purchase within CA due to Age (Over 55), Disability or Wildfire. It also addresses the property tax basis when transferring your property to a child or grandchild.
CA Prop 13
County property tax rate is limited to 1% plus any voter approved bonds. The annual increase is limited to 2%.
IRS Mortgage Interest Deduction
IRS Itemized interest deduction is limited to the interest paid on up to $750,000 in loans on your primary or secondary residence. For loans originated before 12/15/2017, the limit is $1,000,000.
IRS HELOC Interest Deduction
IRS allows the deduction of HELOC interest if the proceeds were used to substantially improve the residence.