When you sell your home, whether it be your first home or your tenth home, it is important to be aware of what the tax laws are and how they will affect your sale. Like most sellers, you’re probably trying to simultaneously sell your current home, while also buying a new home, adding more and more to the current to-do list. Regardless of your situation, here are a few things you need to remember about federal taxes that can affect you throughout the process.
As long as you have lived in your primary home for at least two years, you can exclude up to $500,000 of the profit from the sale if you’re married filing jointly or up to $250,000 if you’re single. As a homeowner, you can use this exclusion every time you sell your primary home as long as you have owned and lived in the home for two years, and haven’t sold another home in that time. In some cases, you may qualify for partial exclusions, so it is always important to contact your tax representative if you have questions.
Reporting the Sale on Your Tax Return
Some people questions whether or not they need to report the sales of their home on their income tax return. The answer is generally, no you don’t need to report it on your income tax return as long as you didn’t receive a Form 1099-S, Proceeds from Real Estate Transactions, from the real estate agent who was in charge of closing the sale. There are a few ways to avoid getting that form, just ask you real estate professional what your best option is.
Selling your home is an exciting life event, but with all the numbers rolling around in your head, it can also be challenging to remember every little detail. No matter your situation, if you are confused about anything it will be best for you to contact your tax representative regarding everything you think you need to know. After all, selling your home is a big deal, it is better to be safe than sorry. For more information about what you need to know about taxes when selling your home, visit here.