5 Tax Tips For When You Sell Your Home
If you’re selling your primary residence, here are a few things to keep in mind.
- If you lived in your home for at least two of the last five years, and make a profit on the sale you can exclude the first $250,000 (twice that if you’re married) from ANY Income Tax AND any Net Investment Tax.
- If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return. But if you receive form 1099-S showing the sale, it’s still a good idea to report it, and then show that it’s excluded from any tax.
- If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most of the time.
- Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523 for details.
- You cannot deduct a loss from the sale of your main home.
When you’re getting ready to sell any real estate, including your main home, it’s usually a good idea to let your tax preparer know. Whether it’s your main home or another property, there are things you can do to reduce the tax on the transaction but they have to be addressed prior to the sale.
By: Evan A. Nielsen (Licensed in California)
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