Apart from the initial benefits of having a home, selling your home is also profitable. There are some steps you can take to maximize the tax benefits of selling your home. Most home-sale profit is now tax-free, and you also don’t need to report your transactions to the IRS. However, this statement does not apply to all conditions. If you are one of the exceptions, knowing the rules will help you cut down your tax bill.
Our goal at RC Property Group, LLC is to ensure that you get maximum profit on the sale of your home. This is why we have prepared this article to enlighten you on the tax aspects of homeownership during home selling. Let’s explore more.
Do I need to pay Tax On The Profit I Make From My Home Sale?
- If you owned and stayed in the place for two out of the five years before the sale, a profit of up to $250,000 is tax-free.
- If you are married and file a joint return, a profit of not more than $500,000 is tax-free.
Furthermore, this tax exclusion may be partial. For instance, if you only stayed in your new home for a year, you’ll have a tax exclusion of 50%. That is $125,000 if you’re single and $250,000 if you’re married.
These conditions have helped some homeowners to make huge profits on the sale of their properties. If you also want to sell your house at the highest possible price, it is advisable that you work with us at RC Property Group, LLC. We will buy your house fast and offer you an irresistible cash deal for your home.
Requirements To Qualify For This Tax Break
- A change in your place of work.
- Health challenges.
- Unforeseen circumstances and more.
You must have used the home for at least two years. You don’t have to spend every minute of your day at home. You can go on tour or vacation, but not for long. You are only allowed to have one principal residence at a time.
You haven’t gained any form of exclusion from the sale of another home.
Reporting The Gain
If you don’t qualify for the tax exclusion or you made an excess profit from the home sale, it is reported as a capital gain. This gain can be reported as a short-term capital gain if you have owned the house for one year (or less). If you’ve owned the property for more than a year, it can be reported as a long-term gain.
For short-term gains, they are taxed at the same rate as your income tax. For long-term gains, you may be charged 15%, 20%, or none at all. However, this depends on your taxable income. For some taxpayers, you may be required to pay no more than 15% of the profit.
Taking advantage of tax benefits will save you a lot of money. For homeowners putting up their homes for sale, having that extra profit will go a long way. However, you must be able to meet up with the conditions for the tax exclusion.
If you are a homeowner that wants to get the best price that commensurate the value of your home, reach out to us at RC Property Group, LLC. We will make you an irresistible deal without any hidden charges.