If you’re thinking about selling your home, it’s important to understand the tax liabilities that come with it. When you sell your home, you may be subject to taxes on any profits you make from the sale.
Here’s what you need to know about tax liabilities when selling your home.
Capital Gains Tax:
One of the primary tax liabilities you may face when selling your home is capital gains tax. Capital gains tax is a tax on the profit you make from the sale of an asset. When you sell your home, you may be subject to capital gains tax on any profit you make from the sale.
However, there are some exceptions and exclusions that may allow you to avoid or minimize capital gains tax when selling your home. For example, if you’ve owned your home for at least two years and have lived in it for at least two of the last five years, you may be eligible for the primary residence exclusion. This exclusion allows you to exclude up to $250,000 in capital gains if you’re a single filer, or up to $500,000 if you’re married filing jointly.
If you don’t meet the eligibility requirements for the primary residence exclusion, you may still be able to exclude a portion of your capital gains under certain circumstances. For example, if you sold your home due to a change in employment, health reasons, or certain unforeseen circumstances, you may be eligible for a partial exclusion.
State and Local Taxes:
In addition to federal taxes, you may also be subject to state and local taxes when selling your home. These taxes can vary depending on where you live, so it’s important to do your research to understand what taxes you may be subject to.
Some states have their own capital gains tax on real estate sales, while others have transfer taxes or recording fees that are due when you sell your home. Additionally, some states have different rules for the primary residence exclusion, so it’s important to understand how your state handles this exclusion.
Deductible Expenses:
When selling your home, there may be some expenses that you can deduct from your taxable income. For example, you may be able to deduct the cost of any improvements you made to your home, such as a new roof, residential gutter system repair, ac repairs, or a kitchen renovation. Additionally, you may be able to deduct the cost of any real estate commissions you paid to sell your home.
It’s important to keep accurate records of any expenses related to selling your home so that you can take advantage of any tax deductions that may be available to you.
Selling your home can be a complex process, and understanding the tax liabilities that come with it is an important part of that process. By doing your research and working with a professional realtor at GayRealEstate.com, and a qualified tax professional, you can minimize your tax liabilities and ensure that you’re making the most of your home sale.
Jeff Hammerberg is a distinguished entrepreneur and broker, and the visionary founder of GayRealEstate.com. For over 25 years, he has been a prolific writer, coach, and author who has been instrumental in advancing the cause of fair, honest, and equitable representation for all members of the LGBTQ+ community in real estate matters. GayRealEstate.com, which he established, is the largest and longest-running gay real estate agent referral service in the nation, boasting over 3500 LGBTQ+ realtors who operate in cities across the United States, Canada and Mexico. His commitment to promoting inclusivity and accessibility in real estate has earned him a reputation as a passionate advocate for the LGBTQ+ community.
