Tax Tips for Selling a Residence
Discover essential insights about federal tax benefits when selling your primary residence in this recent #GTK blog post. Uncover criteria for minimizing capital gains, learn about tax exclusions, and explore strategies to reduce your tax bill through adjustments to the home’s basis.
To claim a tax exclusion, you must have owned the home for at least two years and lived in the home for at least two out of no more than five years of ownership. The tax gain exclusion that’s available is $250,000 if you’re single, or $500,000 if you’re married and use a joint tax return. If you sell at a loss, such as a short sale, you can’t deduct the loss from your income, likely because of the many homeownership benefits subsidized by the government, including loan programs, first-time and low-income homebuyer grants, energy star appliance credits, and so on. Tax exclusions are also subsidized by the government.
To maximize your gain and lessen your tax bill, you can adjust the basis of the home you sold. The basis is the price you paid for the home, including closing costs and settlement fees. The adjusted basis, explains Smart Asset, factors in capital improvements that you made to the home, such as replacing the roof or the HVAC, adding a second story, or laying utility lines to the home. You can also adjust for casualty losses, like restoring your home after a fire or water damage.
The higher your adjusted basis is, the lower your capital gains are.
Questions? Let me know! I’d love to hear from you. #berkshirehathawayhomeservicespreferredrealestate
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