Tax Tips for Selling Your Home

calculating taxes when selling homeIf you’re like most homeowners these days, you’ve given plenty of thought to maximizing the sale price of your home. After all, it will be one of the biggest financial transactions of your life. You’ve watched hours of HGTV, amped up the curb appeal, deployed the best staging tips Pinterest has to offer, and hired a real estate agent you trust to help you get the best price possible. But have you thought about how selling your home will affect your taxes?

In order to maximize the financial benefit of selling your home, you need to go one step further than a good sale price- you also need to minimize your tax exposure. Your home sale will be much more satisfying if you don’t have to turn around and pay an arm and a leg in capital gains taxes!

With the home sale tax exclusion, homeowners can take advantage of a major tax break. To qualify, you must have lived in the home for two or more years of the five years immediately prior to selling it. Singles can make a profit of up to $250,000 and married couples a profit of $500,000 without having to pay capital gains taxes. Even if you don’t qualify for the full exclusion, you may be able to receive a partial exclusion. The IRS takes other factors into account, so if you have lost your job, experienced a health crisis, or dealt with other unforeseen financial issues, you could be eligible for other exclusions.

In addition to the home sale tax exclusion, there are other deductions which can minimize your tax exposure when selling your home, including:

Home improvements- Most homeowners know how much their initial home purchase was, but what about the thousands of dollars put into the home over the years for remodeling, additions, and various other home improvement projects? If you have receipts for the new roof you had put on, the kitchen remodel you completed, the addition you built, etc., you can reduce your cost basis in the eyes of the IRS, and in turn, your taxes.

Special tax assessments- In addition to home improvements, you can reduce your cost basis by deducting special tax assessments like energy credits; depreciation; loss due to theft, fire, or casualty; adoption credits for home improvement; neighborhood improvements  like the addition of sidewalks or streets; and right-of-way proceeds.

Selling expenses- Expenses incurred from selling your home are also deductible. These can include the cost of title insurance, survey fees, legal fees, transfer taxes, and closing costs. 

If you are ready to sell your Cherokee County home, contact TPG today! Our team of experienced Woodstock real estate agents can help you navigate the home selling process to ensure a bright start to your new life.

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