Tax Tips for Home Sellers

Real Estate Tax Time Tips!

So, you sold your home last year - Congratulations! You might be asking yourself  “Do I have to pay taxes on the profit I made selling my home?”

For the answer to this and many more questions you might have, we turned to the great folks at Turbo Tax: The answer???

If you owned and lived at this residence for 2 of 5 years before you sell, $250,000 and under of profit is TAX FREE! Remember too - that amount doubles if you're married and filing jointly.

Sorry - you don't get to take a deduction if you sold for a profit loss.

As long as you haven't claimed this exclusion on another home in the last two years, you can use it every time you sell a house.

If you made more profit than the maximum amount (either filing single or jointly) first of all - Congratulations! Secondly, you have to report the amount above the limit as a capital gain.

Do I qualify to get this kind of a tax break?

You do qualify for this break if these 3 things apply to your situation:

  • Home Ownership: you have to have owned the house for at least a 24 month period (so 2 full years) within the 5 years prior to the date of selling it.
  • Primary Residence Use: You must have used the home as your primary residence for at least 2 of the 5 years prior its' sale.
  • No Two-Timing: You have not excluded the profit/gain on the sale of a different home within two years prior to this sale. (Which, if it has had to be your "primary residence" would be virtually impossible anyway.)

If you're filing a joint tax return and want to go for the $500,000 gain exclusion; at least one of you must have owned the home for 2 full years within the 5 years prior to selling and BOTH parties have to have lived in the house for 2 years of the 5 before selling it.

If you don't meet all of the requirements to get the tax exclusion, don't fret! There are some rules that can be used to get all or part of the tax break.

For the answers to more great real estate related tax tips from Turbo Tax visit their website at: https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6tbMe3Dy#paytaxes

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