Selling Your Home May Not Be A Taxing Event
Spring and summer in some areas of the country are prime times to sell a home.
In warmer climates like Texas, Florida, Arizona, Nevada and the Carolinas, the home buying/selling season is less defined. In more temperate climates it rarely matters when you put you home on the market.
There will likely be tax implications no matter when you sell.
There also may be a big fat tax advantage. So, whether you are putting your home on the market now or waiting for the next Spring/Summer season, you can brush up on knowing how you may be affected tax wise.
For starters, be aware that the IRS allows each individual taxpayer to exclude up to $250,000 of gain from the sale of their primary residence so long as certain ownership and occupancy requirements are met. If an individual/couple is unable to exclude all or part of the gain, it is taxable as a capital gain in the year of sale.
Taxpayers who meet the ownership and occupancy tests may exclude the entire gain on the sale of their primary residence up to $250,000, as long as gain has not been excluded on a sale of another home within two years of the sale of the current home.
Couples may exclude up to $500,000 if all the following are true:
- The taxpayers are married and file a joint return for the year.
- Either the taxpayer or their spouse meets the ownership test.
- Both the taxpayer and their spouse meet the use test.
- During the two-year period ending on the date of the sale, neither the taxpayer nor their spouse excluded gain from the sale of another home.
You’ll find a more extensive article on my website. https://www.taxationsolutions.net/tax-topics/selling-your-home/