Tax season is just about to come to a close! This means that if you haven’t yet filed, now is the time to get to work before the cut off date comes around. For those who are still in the process of filing, wondering what else they may be eligible for in terms of exemptions and write offs, there is one large piece that may help you solve this puzzle. If you sold your home in 2017, then you have the opportunity to save a large sum of money this spring! Several exemptions and tax write offs for sellers exist.
Here’s how to take advantage of them.
Know what you’re eligible for
There is a major real estate tax exclusion available, and just about anyone who sold their home last year can take advantage of it to some degree. Here is a rundown:
- You don’t have to pay taxes on a portion of the sale of the home. This means that if you’re filing as single, then you pay taxes after the first $250,000 of the sale and, if you’re filing jointly, you pay taxes after the first $500,000. Given the fact that the median cost of a house is currently at about $200,000, this write off heavily works in favor of most Americans!
- You need to have lived in the home for at least some time. To receive the full benefit of this tax exemption, you must have lived in the home for at least two full years before selling it. However, if you were unable to stay the full two years due to some legitimate circumstance, like illness, unemployment, or a divorce, then you may still be eligible for a reduced exclusion. In this instance, the amount of taxes you don’t have to pay is in proportion to how long you’ve lived there. For example, if you are filing jointly and have lived in the house for a year, or one-half of two years, then you’d have to pay for half of the $500,000 worth of taxes, or after the first $250,000.
- You can’t used this exclusion recently. If you sold another home within the past two years and used this exclusion, then you can’t use this exclusion.
There are several tax implications of selling a house, so it’s best to familiarize yourself to them before filing this spring!
Don’t forget the with holdings!
Guess what, there’s more! If you sold your home last year, and had to spend some money in the process, then you may be able to withhold some tax dollars. Here are a few things you may be able to write off depending on your situation.
- Moving costs
- Real estate agent commission
- Extensive home improvement
Don’t let money go to waste by neglecting to uncover all that you’re eligible for in terms of exclusions and write offs. We recommend a consultation with a tax specialist or using a tax software to help you file if you’re unsure of how to do it on your own!
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