No one likes paying taxes. But if you’re selling your home this year, there may be ways you can leverage your home sale to lower your tax bill. Home sellers need to know their tax deductions when they prepare their tax returns. So keep track of your expenses. When your home sells, you will have a detailed closing statement. Your tax preparer will want to have a copy of your closing statement!
So how, exactly, do you do that?
A recent article from realtor.com outlined key tax deductions, write-offs, and exemptions available to home sellers, including:
- Selling costs. Legal fees. Escrow fees. Real estate commissions. Even home staging! As long as the property is a primary residence and you’ve lived in the home for at least two of the last five years, any expenses directly related to selling your home are deductible in that you can subtract them from the sales price of your home, which impacts your capital gains tax—and can definitely help you save some money.
- Home improvements. If you improved your home in order to make it more appealing to buyers, those qualify as selling costs—and, as such, you can deduct them from your final sales price. However, these need to have been directly related to the sale of your home and done within 90 days of the closing.
- Property taxes. Before you sold your home, you owned it—which means you can deduct property taxes (up to $10,000) for the tax year when you owned and lived in the home.
- Discuss these details with your CPA or tax return preparation expert. Home sellers need to know their tax deductions.
If you need to discuss all the aspects of getting your home on the market, please call us. We welcome the opportunity to help YOU make the right decisions. Let’s talk about selling your Gainesville home!