What Happens After The Closing?
1. What is a Closing Statement?
A Closing Statement is prepared by the attorney. It is an accounting of the funds & other activities that transpired at the closing table. The seller should keep this Closing Statement along with the other important documents that the attorney will prepare at the closing. Sellers should forward a copy of the Closing Statement to their accountant for tax purposes.
2. Will the seller be responsible to pay a Capital Gains Tax?
That depends. If the seller has owned the home for at least 2 of the past 5 years as a primary residence & did not exclude the gain from the sale of another house, then the seller may be able to exclude all or part of the gain. The maximum exlusion is $250,000 for a single owner or $500,000 for joint owners. A Section 1031 Tax-Deferred Exchange is for investment properties only, not primary residences. The Capital Gains Tax could be deferred if another property is purchased within six months from the date of the sale. There are many rules with 1031 exchanges so sellers should be sure to consult with a qualified tax professional for guidance.