Income and Investments Selling Your Home? 4 Must Know Tax Tips Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxLisa Published Jun 8, 2023 2 min read With home sale prices on the rise again, you may be considering selling your home soon to cash in on a profit. Although most homeowners find that their home-sale profit is tax-free, there are tips you should know to make sure you are getting the most out of your home sale: Profit may be tax-free. When selling your principal residence, one thing to keep in mind is all your money earned from the sale may be tax-free. Taxpayers are often surprised to find that profit from the sale of their home is tax-free. Thanks to the IRS, if you owned and lived in your main home for two out of five years before the sale, you can make up to $250,000 profit on your home sale, and you may not have to claim it on your taxes. If you are married, your exclusion gets more of a boost. As a married couple, you may be able to exclude up to $500,000 profit. Don’t forget home improvements. If you enhanced your home with improvements like a new roof, a remodeled kitchen, or a full on backyard remodel with a pool, don’t forget to add what you paid for your home improvements to your home’s cost basis (what you paid for it) to get the adjusted basis. Increasing your cost basis by what you paid for your home improvements to arrive at your adjusted basis will lower your taxable gain. For instance, if you sold your house for $500,000 and paid $200,000 for it, you may think your gain is $300,000, but by making sure you add your $100,000 in home improvements, you will reduce your profit below the taxable level to $200,000. Realtor and lender fees can reduce your bottom line and taxes. Realtor sales commissions and points you pay on behalf of the seller can really add up, but you can lower your profit by making sure you decrease the proceeds from the sale by any sales commissions paid or points paid on behalf of the seller. No reporting necessary. If you are lucky enough to sell your home and make a profit, you may find, like the majority of taxpayers, that you do not need to report your home sale when it’s time to file your taxes thanks to the gain exclusion rules in place unless you receive Form 1099-S, Proceeds from Real Estate Transactions. You can avoid getting this form if you certify (usually at closing) that you meet the ownership, use, and timing tests. If you sell your house this year, there’s no need to worry about knowing these rules. TurboTax will ask you simple questions and give you the tax deductions you are eligible for based on your answers. File now Previous Post Five Tips to Enjoy and Save This Mother’s Day Next Post How to Build Generational Wealth Written by Lisa Greene-Lewis Lisa has over 20 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. She has held positions as a public auditor, controller, and operations manager. Lisa has appeared on the Steve Harvey Show, the Ellen Show, and major news broadcast to break down tax laws and help taxpayers understand what tax laws mean to them. For Lisa, getting timely and accurate information out to taxpayers to help them keep more of their money is paramount. More from Lisa Greene-Lewis Follow Lisa Greene-Lewis on Twitter. One response to “Selling Your Home? 4 Must Know Tax Tips” We are selling a home this year and have owned it for less than two years. We are moving due to a job change to another state. Will we have to pay capital gains? Does Turbo Tax cover this kind of event when filing with Turbo Tax? Reply Leave a ReplyCancel reply Browse Related Articles Crypto Understanding Crypto and Capital Gains Work 7 Things You Need to Know About the New Business Report… Work Using Form 8829 to Write-Off Business Use of Your Home Tax Tips Roth 403(b) vs. Roth IRA: Which Should You Invest In? Life Interest Rates, Inflation, and Your Taxes Investments Essential Tax Tips for Maximizing Investment Gains Uncategorized TurboTax is Partnering with Saweetie to Elevate Hoop Dr… Business Small Business Owners: Optimize Your Taxes with a Mid-Y… Small Business The Benefits of Employing Your Children and the Tax Bre… Income and Investments Are Olympics Winnings Taxed?
We are selling a home this year and have owned it for less than two years. We are moving due to a job change to another state. Will we have to pay capital gains? Does Turbo Tax cover this kind of event when filing with Turbo Tax? Reply