Have you recently sold your house? Here’s what you need to know about how it affects your tax return!
Gains on the sale of your primary residence are taxable. However, gain exclusions apply to the sale of your primary residence if you have owned (and occupied) the property for at least two of the last five years. The gain exclusion allows you to exclude up to $250,000 ($500,000 for married couples) in profit from the sale of a primary residence. Gains above and beyond that amount, or if the ownership and occupancy requirements are not met, are taxable. If the sale is related to health problems, a job-related relocation, or other unforeseen circumstances, you may be able to claim a partial exclusion on the gain.
Be aware that prior to 1998 taxpayers could defer gain from the sale of their primary home into the purchase of a new property. Gain deferral is no longer permitted, however, and previous gains that were deferred must be accounted for when the home is sold.
Unfortunately, you cannot deduct a loss related to the sale of your primary home (or second home). You will still need to report the sale on your return to avoid being taxed on the gross proceeds of the sale.
Have questions about selling your home and how it impacts your taxes? Call Taxation Solutions, Inc. today for knowledgeable tax help. We have more than 40 years’ experience in the business, and we’re standing by to put our expertise to work for you!