Capital gains tax rates breakdown by income (Source: NerdWallet) The rate is 0%, 15%, or 20% dependent on your tax bracket. However, if all 3 requirements apply to you and you happen to sell a house in a competitive area where homes are worth upwards of $750,000+, you can apply the tax exclusion on up to $250,000 of your home sale profit if you’re single, or $500,000 if you’re married.Īs for your leftover profit, expect to pay taxes on that number. If all 3 apply to your situation and you sell a house in an affordable area where homes typically don’t fetch more than $250,000 (if you’re single) or $500,000 (if you’re married), you most likely won’t need to report the home sale on your taxes because you’re under the exclusion threshold.
#Tax documents checklist for buying selling house full#
You waited at least 2 full years before using the $250,000/$500,000 tax benefit on another primary house.The house was your primary residence for at least 2 full years.That’s because there’s a good chance the profit from your home sale is tax-free.Īccording to the Section 121 exclusion from the IRS, you won’t need to pay taxes on up to $250,000 of your net profit, or up to $500,000 if filing jointly, if you meet 3 basic requirements: Understanding the Capital Gains Tax Breakīefore we get to the nitty gritty, know that in most cases when you sell your home, you won’t even need to report the sale to the IRS. Not to worry we’re here to help you navigate the rules, regulations and stipulations so you can feel more confident about the taxes you owe-or (better yet) don’t owe. Or worse yet, finding out after the chips fall that you lost out on big breaks. But selling a house can be particularly daunting, especially when you account for the numerous and vexing tax implications involved.Īs if the process of selling a house wasn’t complicated enough, lo and behold Uncle Sam decides to play a mean numerical trick on you when that dreaded tax season rolls around.Īfter all, the last thing you want after popping the bubbly in celebration of your big home sale is a surprise letter from the Internal Revenue Service (IRS).
Owning a house (or two, or three) is an exciting milestone in life, and a quintessential symbol of the American Dream. If you need help determining the taxes on your home sale, please consult a skilled tax professional. DISCLAIMER: As a friendly reminder, this blog post is meant to be used for educational purposes only, not legal or tax advice.
0 kommentar(er)
