Selling Your Home? Might Want To Know These!
The summer months are a prime period for folks selling their homes. If that happens to be you, or if you are considering doing so, you need to know some important points about doing so.
First and best of all, did you know that if you sell your home and make a profit, the gain on the sale may not be taxable? Nice, huh? This is one of the few "gimmes" left in the tax code.
But that's just one key piece of information that you should know. Here are some other facts to keep in mind should you happen to sell your home this year.
- As mentioned, if you have a capital gain on the sale of your home, you may be able to exclude some or even all your gain from tax. This rule may apply if you owned and used it as your main home for at least two out of the five years before the date of sale.
- There are exceptions to the ownership and use rules. Some exceptions apply to persons with a disability. Some apply to certain members of the military and certain government and Peace Corps workers. For specific details, you check out IRS Publication 523, Selling Your Home.
- The most gain you can exclude is $250,000 per person, or $500,000 for joint returns. Also, the new Net Investment Income Tax will not apply to the excluded gain, which is more great news.
- If the gain is not taxable, you may not need to report the sale to the IRS on your tax return at all, so tax reporting is simplified.
- You do have to report the home sale on your tax return if you cannot exclude all of the gain. Further, you must report the sale if you choose NOT to claim the exclusion.
Choosing not to claim the exclusion is rare, but is sometimes done. Reporting the sale on your return is also required if you receive Form 1099-S, Proceeds From Real Estate Transactions, even if none of the gain is taxable.
Caution: If you report the sale you should review the Questions and Answers about the Net Investment Income Tax on IRS.gov. - In general, you can exclude the gain from the sale of your main home only once every two years.
- If you own multiple homes, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.
- If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules see Publication 523.
- If you sell your main home at a loss, you cannot deduct the loss. Hey, they will only go so far!
In addition to Publication 523 referred to above, you may find helpful the IRS YouTube video and Podcast called "Selling Your Home" that are also found on the IRS website.
Good luck selling your home! May you get your full asking price, and then some!!
