Tax season is in full swing, and some of you may be sweating right now. For those who have recently sold their home, you’re probably wondering if you need to pay a large sum to the government. You most likely made a lot of money off of your sale, and we know the government loves to tax us on selling. Then comes those who are considering selling. You’re probably dreading the fact you’ll have to report it, but today’s your lucky day.
Thanks to the Taxpayer Relief Act of 1997, you can report the costs of the closing agreements and contract signing as deductibles. But the real sweet part is that if you made a profit on the sale of your home, you are excluded from being taxed on it (with certain guidelines). Those guidelines are as follows:
- Owned and lived in the home for at least 2 years
- You can exclude the profit from tax if your gain is under $250,000 ($500,000 for married couples)
So, when you go to file your taxes this year, you do not need to report the sale of your home if you meet the required guidelines above. The money is yours to keep, and hopefully, will be well spent investing in a new home.
What About Residents Who Own 2 Homes?
The IRS has a special rule on excluding home sales from your taxes. You can only exclude your main residence. For example, if you have a house in the city and live there, but also own a beach home you live at during the summer, you cannot exclude the beach home from your taxes. For more details about tax law and the rules of selling your home, visit the IRS’s website: click here.
Selling Your Home
Selling your home can be a chaotic and emotionally-challenging time for you. If you’d like more information or want to ask a question about selling your home, visit our “Sell” page or fill out the form below. We’d be happy to answer any of your questions.