What is capital gains tax?

Mortgage recasting is when you make a large lump sum payment toward your principal and then ask your lender to recalculate your monthly payment based on the new lower balance. Your interest rate and loan term stay the same, but your monthly payment drops because you owe less. It's different from refinancing because you're keeping your existing loan. No new application, no credit check, no appraisal, no closing costs in the traditional sense. Most lenders charge a small recasting fee, usually $150 to $500, and that's it. Here's how it would work with your numbers. You have a $350K loan at 6.6 percent. If you made a $50K lump sum payment and then recast, your lender would recalculate your monthly payment as if you took out a $300K loan at 6.6 percent with whatever time is remaining on your term. Your payment drops, your rate stays the same, and you've knocked $50K off your balance. Whether you should do it depends on your situation. Recasting makes sense if you come into a chunk of money like a bonus, inheritance, or proceeds from selling another property, and you want a lower monthly payment without the hassle and cost of refinancing. It's especially useful when your rate is competitive enough that refinancing wouldn't save you much, or when rates are higher than what you already have. It doesn't make sense if your goal is to pay off the loan faster rather than lower your payment. In that case, just make the lump sum payment as a principal reduction and keep making your current payment. You'll pay the loan off sooner and save more in interest than recasting would. How often you can recast depends on your lender and your loan type. Most lenders allow it once or twice during the life of the loan. Some allow it more frequently. FHA and VA loans typically cannot be recast. Conventional and jumbo loans usually can. Call your servicer and ask if your loan is eligible, what the minimum lump sum requirement is, and what the fee is. Most lenders require at least $5K to $10K as a minimum payment to recast. At 6.6 percent, if rates drop significantly in the next year or two, refinancing might make more sense than recasting because you'd lower both your balance and your rate. But if you have a lump sum available now and want immediate payment relief without waiting for rates to move, recasting is a smart low-cost option.

Capital gains tax is the tax you pay on the profit when you sell a property for more than you paid for it. The good news for homeowners is the primary residence exclusion. If you lived in the home for at least two of the last five years, you can exclude up to $250,000 of profit from taxes if you are single, or $500,000 if married filing jointly. Most people who sell their primary home owe nothing. Investment properties do not get that exclusion and are taxed at capital gains rates, which depend on your income and how long you owned the property. For paperwork, save your original purchase documents and closing disclosure, records of any capital improvements you made like a new roof, kitchen remodel, or addition, and your closing documents from the sale. Improvements increase your cost basis which reduces your taxable gain. Your CPA will need all of it.

Great question! Capital gains tax is a tax on the profit you make from selling an asset like real estate, stocks, or other investments. When it comes to real estate, capital gains tax is typically owed when you sell a property for more than what you originally paid for it—minus certain expenses like improvements and selling costs. Who pays capital gains tax? If you’re selling your primary residence, you may qualify for an exclusion of up to $250,000 in gains if you're single—or up to $500,000 if you're married and meet ownership and use requirements. If it’s an investment or rental property, then capital gains will likely apply. What should you save for taxes? I recommend keeping: Your closing statements (from both purchase and sale) Receipts for improvements (not maintenance) Records of commissions, legal fees, or other selling costs As a Realtor with 25 years in the Omaha market, I always advise clients to consult with a tax professional for personalized advice. But I’m happy to help gather the documentation you'll need! Let me know if you’d like a referral to a local CPA or have questions about selling your home—I'm here to help. — Todd Bartusek Top 1% Omaha Realtor | All Metro Real Estate Group | Berkshire Hathaway HomeServices

Capital gains tax is what you pay when you sell an asset, like real estate, for more than you bought it for. If you make a profit on the sale of your home or an investment property, the IRS looks at that profit as taxable income. There are a couple of exceptions: if it’s your primary residence and you’ve lived there at least 2 of the last 5 years, you may be able to exclude up to $250,000 (or $500,000 if married filing jointly) of that gain. Who pays it? The seller. What paperwork should you keep? Your closing statements (HUD/ALTA), records of improvements you’ve made, and of course your purchase documents. Those help calculate your “basis” and show what your actual gain is. Always loop in your tax pro—they’ll thank you for bringing those papers.