Tax Tips for Home Sellers
If you’re selling your home, or sold your home last year, it’s important that you understand the tax implications you will face. From capital gains tax, to deductions and more, here are some tax tips for home sellers:
Be sure you don’t owe Capital Gains Taxes!
The profit you receive from real estate price appreciation is considered a capital gain, and could be taxable by the federal government. For example, if you bought your home for $750,000 and sold it for $825,000, your capital gain would be $75,000.
In order to waive the capital gains tax, you have to have owned your home for at least two years and it must be your primary residence for at least two of the past five years. The first $250,000 in capital gains is tax-exempt, and if you’re married, filing jointly, that goes up to $500,000. So for the average homeowner, capital gains tax is not a concern.
If you haven’t lived in your home for at least two years before selling, there are some circumstances, like a divorce or job transfer, that will allow you to avoid capital gains tax.
If you’re moving for a job transfer, deduct your moving expenses!
If your company does not pay for your move and the move is over 50 miles away, you can deduct your moving expenses from your annual income. This will often save you hundreds of dollars come tax time.
Ready to sell? Find out more about selling with Cesi Pagano & Associates!