Tax Deductions When Selling
It’s that time of year when CPAs (certified public accountants) trade in week night family dinners for quick take out options… that’s right! Tax Time! Some people love it because they get a nice chunk of change back from Uncle Sam via a refund, whereas others who owe taxes, are less enthused. No matter the category you find yourself in, the goal tends to be the same; keep as much money in your pocket as possible! So, when I came across an article on Realtor.com that touted, “5 Sweet Tax Deductions When Selling Your Home”, I knew I had to share!
First, according to the article, costs associated with the selling of a home can be deducted which include legal fees, escrow fees, advertising costs and real estate agent commissions. One of the tax accountants interviewed even named home staging fees as a deduction. Even if you didn’t spend money on home staging, you likely made improvements to your home to boost sales (and hopefully it’s value). If these improvements were made within 90 days of closing, the costs of these improvements can be deducted as well. Talk about a win; you sell your house (again, hopefully for a higher price) and can claim the costs as a deduction! These are not the only expenses that can be written off; if you moved for a job, the moving expenses can qualify as a deduction. However, moving into 2018 this deduction will only be accepted for members of the armed forces on active duty.
Another deduction are property taxes. You can deduct this amount paid in the time you owned the house. There is a bit of a change moving into 2018 with the tax changes; according to the article, “this deduction is still allowed, but your total deductions are capped at $10,000” … “You may be able to avoid this cap if you prepaid your 2018 taxes and if your property was assessed in 2017, but estimated assessments won’t qualify.” Just as with the property tax, mortgage interest paid in the time you owned the house can be deducted as well, up to $1 million that is.
The last one that realtor.com has included in their article is not a deduction but an exclusion. For people who sold their home and made a profit after paying off expenses and outstanding mortgage debt, there is a capital gains tax. The profit is considered taxable income, however you can exclude up to $250,000 if single and $500,000 if married, if you have lived in the home as your primary residence at least two of the past five years. To learn more about these deductions and find advice from tax experts, please read the sourced article below. (Please note: Stockton Mortgage does not provide tax or legal advice. Consult your tax attorney or a CPA for information.) To learn more about what we offer at Stockton Mortgage, check out our website: http://www.smcapproved.com/