Claiming the unclaimed.
I discovered that you can search for unclaimed assets that may belong to you, such as unmanaged retirement accounts, reimbursement fees, or paychecks. According to the National Association of Unclaimed Property Administrators
, state treasury departments return over $3 billion
to their owners through their website. I went to their website and claimed a $13 check that was issued to me by a company that worked for 12 years ago.
Taxes on home sales. Home values are soaring
with the surge in demand over the past year. What does this mean for sellers? If you purchase another home that is of equal or higher in value to the home you sold within the same year, then it simply means you can afford a more expensive house, assuming the home you sold appreciated in value. If you do not plan on purchasing another home within the same year, you have to navigate a maze of IRS regulations. Start with the amount of time you owned the house. If you sold the home in less than 24 months from the date of purchase, any gains will be taxed as ordinary income at your marginal tax rate
. You cannot deduct losses from the sale but there are certain circumstances that are exempt
from these taxes such as a divorce or relocating for employment. If you owned the house for at least 24 months, then it depends on whether you have other homes and how long you lived in the house you sold. Rental property and vacation homes can affect your tax liability in several ways depending on the amount of time you lived in each property during the past 5 years (see IRS Topic No. 415
). Assuming that you lived there for at least 24 months or 730 days within the past 5 years, the next factor to consider is your filing status and the total gain on the property. If you’re married and file jointly, you can exclude up to $500,000 of the gains. Single people or one person from a married couple can file separately and exclude up to $250,000. This is where it gets murky. I learned that there are some potential loopholes regarding these exclusions that may hurt people with home offices and short-term rentals. According to Nolo
, if your home office was located within your house, any gains from the sale of the property below the $250k/$500k threshold are not subject to capital gains tax even if you claimed deductions for it. If your home office was outside the main home like an unattached garage or guest house, you must allocate the profit between the house and office and calculate your taxes accordingly. The consensus appears to be the same with my interpretation of IRS Publication 523
for a short-term rental (e.g., a bedroom) within the house accept for their approach on depreciation recapture
. This means that certain expenses that were written off for the rental (I’m not sure how this applies to the host or guest fee on short-term rental sites
) will be subject to taxes upon selling the property. It looks like even some accountants are confused by these rules, based on the experience of this person who sold their house in San Francisco
. Anyway, it’s worth thinking through this all carefully if you want to invest in real estate or if you’re planning to sell property as a form of retirement income. There are several actions you can take to avoid incurring a huge tax liability such as converting a second home into a primary residence or limiting your rental period to 14 days or less, two years before you plan to sell.
Keep in mind that I am unaware of your circumstances and this should not be interpreted as financial advice. Consult with a licensed professional about your specific situation 😬.