It is tax season, and it is also a hot seller’s market. Most sellers are seeing big profits in their home sales and many are wondering about the capital gains tax on their home sales.
Nerdwallet.com has come up with some tips on how to reduce or avoid paying capital gains taxes on your home sale.
If you are single the IRS usually allows an exclusion of up to $250,000 and for married couples who file jointly, they allow a $500,000 exclusion. However, there are certain conditions to getting these exclusions.
One especially important factor when it comes to capital gains tax exclusions is that the property you are selling has to be your main residence for at least 2 years.
You can also see if you qualify for an exception. There are certain reasons that would qualify you for an exception, such as, selling the home because of work, health reasons, or some kind of unforeseeable event. You can find the full list and details on IRS Publication 523.
If you have done any renovations, and improvements on the property, make sure you have/keep all the receipts. This shows an increase in your costs/expenses which essentially affects your profit from the sale since you spent additional money on the house.
A tax professional is always a great resource to ensure you are not missing any options and make sure you are doing everything correctly.
Amin Vali Real Estate Investment is also here to help you with any questions you may have or put you in contact with some great tax professionals.