Hey there, fellow homeowners! Are you planning on selling your home anytime soon? If you are, then you might want to consider taking advantage of some sweet tax deductions. That’s right, you can actually reduce your tax liability and keep more money in your pocket by claiming certain deductions when you sell your home. In this article, we’re going to talk about five of these deductions and help you figure out if you’ve taken advantage of all of them.
Okay, let’s start with the boring stuff. When you sell your home, there are a bunch of costs associated with the sale. These costs can include real estate commissions, advertising fees, title insurance, escrow fees, legal fees, and inspection fees. But here’s the good news – all of these costs are tax deductible! That’s right, you can deduct all of these expenses on your tax return and offset any capital gains tax you might owe.
By deducting expenses related to the sale, you can reduce your taxable income and potentially save a significant amount of money on your taxes. It’s important to keep accurate records of all the expenses related to the sale, including receipts, invoices, and any other documentation that proves the expense was directly related to the sale. Additionally, consulting with a tax professional can ensure that you are claiming the correct deductions and that you are in compliance with all IRS rules and regulations. So, while selling your home may come with a list of expenses, remember that you can take advantage of the selling costs tax deduction and keep more money in your pocket.
Now, let’s talk about something a little more exciting – home improvements! Did you make any upgrades or renovations to your home before putting it on the market? If you did, then you might be able to deduct the cost of those improvements from your taxes. The IRS allows you to deduct the cost of any home improvements made within 90 days of the sale. Just keep in mind that only improvements that increase the value of your home are eligible for the deduction.
The home improvements tax deduction is an excellent way to recoup some of the costs associated with upgrading your home. This deduction applies to improvements made within 90 days of the sale and can include anything from a new roof or HVAC system to a kitchen remodel or upgraded bathroom. However, it’s important to note that only improvements that increase the value of your home are eligible for the deduction. For example, adding a pool or outdoor living space may not qualify if it doesn’t add value to the overall property. Keep records of all home improvement costs, including receipts and invoices, and consult with a tax professional to ensure you’re eligible for the deduction and that you’re claiming it correctly on your tax return. With the home improvements tax deduction, you can make upgrades to your home and potentially receive a tax break at the same time!
This one’s a no-brainer, but it’s worth mentioning anyway.
Property taxes are a necessary expense that homeowners have to pay every year, but the good news is that they are also tax deductible. If you paid property taxes on your home during the year that you sold it, then you can deduct those taxes from your taxes owed. This deduction can be a great way to offset any capital gains tax you might owe and reduce your tax liability. Just be sure to keep accurate records of all property tax payments, including receipts or other documentation that proves the expense. You can then include this deduction on your tax return and enjoy the savings. So, while paying property taxes may not be the most exciting part of homeownership, at least you can take advantage of the property tax deduction when it’s time to sell your home.
Capital Gains Tax Exclusion
Did you live in your home for at least two out of the last five years before selling it? If you did, then you might be eligible for the capital gains tax exclusion. This allows you to exclude up to $250,000 in capital gains from the sale of your home if you’re single, and up to $500,000 if you’re married.
This exclusion can help reduce your tax liability and keep more money in your pocket. To qualify for the capital gains tax exclusion, you must have used the home as your primary residence for at least two years, and you can’t have excluded gains from the sale of another home in the two years before the sale. Be sure to keep records of the time you spent living in the home and consult with a tax professional to ensure that you’re eligible for the exclusion and that you’re claiming it correctly on your tax return. The capital gains tax exclusion is a sweet tax benefit that you don’t want to miss out on if you’re eligible!
That’s a pretty sweet tax benefit, so make sure you don’t miss out on it!
Last but not least, let’s talk about moving expenses. If you’re moving because of the sale of your home, then you might be able to deduct your moving expenses.
To qualify for this deduction, your new home must be at least 50 miles further from your old job than your old home was. If you meet this criteria, you can deduct the cost of hiring movers, renting a truck, and even the cost of packing materials. This deduction can help offset the costs of your move and reduce your tax liability. Just be sure to keep accurate records of all your moving expenses, including receipts or other documentation that proves the expense. You can then include this deduction on your tax return and enjoy the savings. So, if you’re planning on relocating after selling your home, make sure to take advantage of the sweet tax deduction for moving expenses.
In conclusion, there are some pretty sweet tax deductions available to you when you sell your home. By taking advantage of these deductions, you can reduce your tax liability and keep more money in your pocket. So, if you’re planning on selling your home anytime soon, make sure you consult with a tax professional to make sure you’re taking advantage of all the tax benefits available to you. Good luck, and happy selling!