For those selling their homes since the pandemic started, the real estate market has seemed kind of nice. Lack of available inventory meant many properties were getting lots of competition, resulting in offers over asking.

But The New York Times describes how the pandemic threw the typical housing market out of whack for the last few years, and now there may be repercussions for that in the form of taxes.

In short, those increased offers on homes are a double-edged sword, since it initially gives you more, but could also nudge you into a higher tax bracket.

Capital gains taxes kick in for solitary tax filers at $250,000, and for married couples, it starts at $500,000.

The average American household certainly is not making half a million dollars per year, but when factoring in a competitive offer on your house being sold? That could put you over that threshold.

The New York Times mentions how in recent years the average sale price of a single-family home has risen to $353,600. And if you were maybe planning to flip a couple of properties while the current market has lots of buyers, that could also hurt you.

Those exclusion amounts previously mentioned for solitary tax filers and married couples. You only qualify for those if you have actually lived in the house as your main residence for at least two of the last five years. So in essence, you only get that tax break on your main residence.

There are ways you can still attempt to avoid qualifying for the capital gains taxes. For instance, any necessary improvements you made to the home can be factored in at income tax time to help you stay under that limit. You could also postpone selling your home until you meet that two-year eligibility to avoid being penalized.

Fred Hubler, Chief Wealth Strategist for Creative Capital Wealth Management Group which offers retainer-based advice and access to accredited investments told MONTCO Today that, “there are several exceptions to the general rules when it comes to real estate and income taxes.

“You definitely want to discuss your particular situation with your accountant or financial advisor,” urges Hubler. “In many cases, sellers are “trading up” and may not have any flexibility in the process. However, if you have the flexibility and meet the requirements as an accredited investor, there are options for you to defer the taxes on the capital gains of the sale of your main property or a secondary property.”

Ultimately, the current housing market has only sparked discussion over whether the income caps for married couples and single tax filers should be increased. They have remained stagnant since 1997, while prices on everything else have only increased.

If you want to learn more about the potential taxes many could now face on their homes, read the New York Times story here.

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