Home Seller Resources
Capital Gains
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Homeownership gives you several opportunities to enjoy tax breaks when April 15th rolls around, since you can deduct many home-related expenses and mortgage interest on your taxes.
But what about home sellers? The largest tax break you can take advantage of when you sell your home is a capital gains exclusion.
You Can Deduct Capital Gains When You Sell Your Home
The full amount you can exclude is $500,000 on a home sale (if you're married and file your tax return jointly) — that's a substantial amount of money!
Now there are restrictions and requirements to be eligible for the full amount, and we wanted to give you a brief overview of capital gains exclusions to help you make the most of this investment.
Am I Eligible to Exclude Capital Gains?
Here's a test to help you decide if you can exclude capital gains from the sale of your home on your taxes.
- You have owned the house for 2 of the last 5 years
- You have lived in the house for 2 of the last 5 years
- You have not used a 1031 Exchange for a similar home
- You have not excluded gains on another home sale in the last 2 years
There are, of course, exceptions and other requirements, but these are the main eligibility tests; you can read the IRS's full article about capital gains exclusions to learn more about the tax break.
How Much Can I Exclude?
If you file your taxes as Married Filing Jointly, you can exclude up to $500,000 of your gains on your taxes. If you file your taxes as Single or Qualifying Widow(er), you can exclude up to $250,000 of your gains from the home sale.
If your spouse dies and you sell your home within 2 years, you may be eligibile for the up to $500,000.
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Where Do I Report My Home Sale?
The IRS has a specific document where you can report your home sale, which you can find on the Sale of Your Home topic on the IRS's website.
We Can Help You Sell Your Home in Celebration
We hope you found this information helpful as you're preparing to sell your home, and we have a few other resources to recommend for you, as well.
We want your sale to be successful and we want it to be exciting, and if there is anything we can do to help you sell your home here, just let us know. We would be happy to talk to you.