In today's real estate market, many homeowners are enjoying significant profits when selling their homes—but with those gains can come an unexpected and sometimes hefty tax bill. The capital gains tax, which applies when a property is sold for more than its adjusted cost basis, is increasingly affecting sellers, especially in high-priced markets where home values have soared over the past decade.

The root of the issue lies in the capital gains exclusion limits set by federal tax law. Single homeowners can exclude up to $250,000 in profit from the sale of their primary residence, while married couples filing jointly can exclude up to $500,000. But those limits haven't been adjusted since they were first introduced in 1997. At the time, those exclusion amounts were more than adequate for most homeowners. Today, with inflation and rising property values, many sellers are surpassing those thresholds and facing taxes on the excess profit.

To avoid paying capital gains tax, homeowners must meet specific requirements: they must have owned and lived in the home for at least two of the last five years. These tests determine eligibility for the exclusion. If a homeowner fails to meet either of these requirements, they might want to consider postponing the sale until they qualify. On the other hand, homeowners who've rented out their property for a time before selling might find themselves partially or entirely disqualified from the exclusion due to the property's changed status as a rental.

Understanding the role of cost basis is also critical in managing potential tax liability. A home's cost basis begins with the purchase price, but it doesn't remain static. Improvements made to the home—such as renovations, additions, or restorations after damage—can raise the cost basis, ultimately reducing the taxable gain when the home is sold. On the flip side, factors like depreciation during rental periods, insurance payouts, or energy efficiency credits can reduce the cost basis. Keeping detailed records of any upgrades, repairs, or legal fees tied to the property is key to accurately determining the adjusted basis and minimizing your tax burden.

If a sale has already occurred and capital gains exceed the exclusion amount, there are limited options available after the fact. Homeowners in that situation may be able to offset the gain with realized capital losses from the same tax year, though that scenario is less common. For those planning ahead and considering a sale in 2025, however, there are several proactive strategies that could help lower or offset a potential tax bill.

One approach is tax-loss harvesting, which involves selling investments at a loss to reduce taxable capital gains from other transactions, including real estate sales. This tactic can be particularly useful for those with taxable investment accounts who keep a close eye on their portfolios throughout the year. Contributing to a traditional IRA can also reduce taxable income if the contribution is deductible, and the same applies to eligible contributions made to a health savings account (HSA) for those enrolled in high-deductible health plans.

Charitable giving is another potential strategy. Donating cash or appreciated assets to a qualified charity can yield a tax deduction that helps offset gains. These donations must follow IRS rules, and the deductibility depends on the taxpayer's income and the type of organization receiving the gift. Unused charitable deductions can generally be carried forward for up to five years.

In addition to these tactics, sellers should be aware of several tax law changes taking effect in 2025. Contribution limits to retirement and savings accounts have increased, including the Qualified Charitable Distribution cap, now set at $108,000 for IRA holders aged 70½ and up. Limits for 401(k), 403(b), and Roth 401(k) plans are now $23,500, with an extra $7,500 allowed for those age 50 and older. Health savings account contribution limits have also been bumped up, and the standard deduction has risen to $30,000 for married couples and $15,400 for single filers.

These higher thresholds could provide more opportunities to shelter income and reduce overall tax exposure. Additionally, legislative efforts are underway to raise the capital gains exclusion limits. The More Homes on the Market Act, which is expected to be reintroduced in Congress, would double the exclusion and tie it to inflation in the future. Whether the bill gains traction remains uncertain, but the conversation highlights growing concern over outdated limits.

If you've seen your home value increase significantly and are thinking about selling in the near future, don't wait to plan. Calculate your potential capital gains, evaluate your adjusted cost basis, and explore tax-saving strategies before the sale. Depending on your situation, it may be worth bringing in a tax advisor who can help you navigate the process and potentially save you thousands in taxes.

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If you've ever taken a walk along the Mississippi River in New Orleans, chances are you've been captivated by the sweeping views, open skies, and refreshing breezes of Woldenberg Riverfront Park. With its 14 acres of lush green space nestled between the French Quarter and the river's edge, it has long been a favorite among locals and visitors alike. Now, once again, this beloved destination is gaining national attention, having been nominated for USA Today's 10Best Readers' Choice Award for Best Riverwalk in the United States.

This isn't the first time the park has turned heads on the national stage. Last year, Woldenberg Riverfront Park made its debut in the competition and secured an impressive second-place finish. Since opening in 1989, the park has grown into more than just a scenic stretch of riverfront—it's become a hub of community activity, culture, and connection. Its walkways, open lawns, and tree-lined paths offer a peaceful retreat from the city's bustle, while also playing host to lively festivals and events throughout the year.

Managed by the Audubon Nature Institute, the park is also home to major New Orleans attractions like the Audubon Aquarium and the Audubon Insectarium. These institutions, along with the park itself, have consistently been recognized in the 10Best Awards, with both the Audubon Aquarium and Zoo previously ranking among the best in their respective categories. This year, the Audubon Zoo is again in the running, further highlighting the city's standout public spaces.

Michael J. Sawaya, President and CEO of the Audubon Nature Institute, says Woldenberg Park does more than provide beautiful views. It serves as a reminder of the Mississippi River's critical role in shaping New Orleans' identity. He called the park's national recognition "a tremendous honor for our entire city."

Looking ahead, the impact of Woldenberg Riverfront Park is set to grow even larger—literally. A major expansion project, dubbed "Riverfront for All," will soon begin construction. This ambitious effort will extend the park two additional miles, connecting it with Crescent Park and forming one of the longest uninterrupted stretches of riverfront green space in the nation. Starting this spring, the transformation will enhance access to the river and further elevate New Orleans as a model for urban waterfront development.

For those who want to show their support, voting is open online and continues daily through April 7, 2025. You can vote once per device each day, and every vote brings New Orleans one step closer to claiming the title of America's favorite riverwalk.

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The U.S. housing market is finally showing signs of shifting in favor of buyers, and this spring could be the most buyer-friendly season since the early days of the pandemic. After several years of tight inventory, elevated prices, and rising mortgage rates, more homes are hitting the market and sellers are starting to budge on price.

Joel Berner, senior economist at Realtor.com, believes the timing couldn't be better for buyers who have been waiting patiently on the sidelines. Following a sluggish 2024, which turned out to be the slowest year for existing home sales since 1996, momentum is starting to pick up—and in a direction that benefits those looking to buy. A growing number of listings, longer market times, and a noticeable increase in price cuts are all contributing to a more balanced market.

Berner points out that this shift isn't solely driven by mortgage rates. While lower rates can certainly draw more buyers into the market, they also tend to increase competition and push prices up. What's happening now is different. The current conditions—more inventory, softer pricing, and sellers showing more flexibility—are creating organic opportunities for buyers to negotiate better deals.

Mauricio Umansky, founder of luxury brokerage The Agency, shares Berner's view. He doesn't expect a repeat of the dramatic price drops seen during the 2008 housing crash, but he agrees that buyers have more leverage than they've had in years. He says now is a good time to make strong offers and be bold, as the market is more receptive to negotiation than it has been in quite some time.

The increase in available homes is a major reason for the market shift. Sellers who had previously held off—many of whom locked in mortgage rates of 3% or lower during the pandemic—are finally starting to list their properties. This "lock-in effect" had created a bottleneck in supply over the last few years, but life events like job changes and growing families are forcing many to move despite the higher rates.

While mortgage rates haven't dropped dramatically, they are projected to decline modestly. Realtor.com's forecast expects rates to fall into the low 6% range by the end of 2025. For context, the current average on a 30-year fixed mortgage stands at 6.65% according to Freddie Mac. But even without dramatic rate changes, market behavior is shifting because of increased activity and changing seller attitudes.

Recent housing data backs up these observations. The number of homes actively listed has grown for 16 consecutive months and jumped 27.5% in February compared to the same time last year. Sales activity is also on the rise, with the number of homes under contract increasing by 18.2% year-over-year. However, homes are taking longer to sell, averaging 66 days on the market—almost a full week longer than last year.

This slower pace, combined with more listings and more cautious buyers, is widening the gap between asking and selling prices. As Umansky notes, sellers are now more likely to face offers below their original list price, and in order to close deals, they'll need to be more realistic. If current trends continue, more price adjustments may be on the horizon.

In short, while it may not be a full-fledged buyer's market just yet, spring 2025 is offering a rare window of opportunity for buyers who've been waiting for better conditions. With more choices, motivated sellers, and a bit more negotiating power, it might finally be the right time to make a move.

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How Closing Costs Might Help at Tax Time

When you finalize a home purchase or refinance, you'll face a range of closing costs that can add up quickly. Most of the time, these charges include fees for appraisals, inspections, loan processing, and taxes. While most of these expenses are just part of the cost of doing business, some of them might actually save you money later—if they qualify as tax deductions.

Closing costs can range anywhere from 2% to 6% of the total loan amount, depending on whether you're purchasing a home or refinancing. Buyers usually carry the bulk of these costs, though sellers often contribute as well, especially in markets where negotiations are flexible. Common fees include charges for loan origination, underwriting, and credit reports, as well as appraisal and inspection costs. Title search fees, title insurance, and discount points paid to lower your mortgage rate are also standard line items.

In most cases, the IRS doesn't allow you to deduct closing costs since they're considered part of the overall purchase expense, not an operational cost tied to the home's use. However, there are a few exceptions. Mortgage interest is one of the most common deductions and is allowed on loans up to $750,000, or $375,000 if married filing separately, as long as the loan was taken out after December 15, 2017. Older loans may qualify for higher limits. You can deduct interest payments each year, as long as you still own the home and itemize your deductions.

Another possible deduction comes from mortgage points, which are considered prepaid interest. If certain requirements are met, the full amount of points paid may be deducted in the year you paid them. If not, the deduction can be spread out over the life of the loan. Private mortgage insurance, or PMI, might also be deductible if your income falls below IRS limits and you itemize your taxes. Property taxes are another potential deduction, both those paid at closing and annually, though these are capped at $10,000 per year for married couples filing jointly or $5,000 if filing separately.

For buyers of distressed properties, costs related to necessary repairs and maintenance might also be deductible under certain conditions. These deductions can usually be claimed in the year you pay them, over the course of your mortgage, or when you sell the property by adding them to your cost basis.

The 2017 Tax Cuts and Jobs Act impacted many of these deductions by increasing the standard deduction, making it less beneficial for some homeowners to itemize at all. As a result, fewer people are writing off mortgage interest and property taxes. However, these provisions are set to expire at the end of 2025, so tax benefits may shift again in the near future.

It's also important to understand which costs are never deductible. This includes expenses like appraisals, home inspections, legal fees, title insurance, transfer taxes, surveys, and document preparation. Likewise, homeowners insurance, utility bills, and general repairs are not deductible. Still, some of these charges may be added to your home's cost basis, which could reduce your capital gains taxes if you sell the home down the road.

After closing, it's wise to keep every document related to your purchase or refinance. If you're ever audited, you'll want proof of what you paid and when. And since the rules can be confusing and depend heavily on your specific situation, it's always best to consult a tax expert or financial planner to ensure you're making the most of any possible deductions.

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