Selling your home can be a really difficult process to go through. Not only are you dealing with all the legal processes that come with selling your home, including some of the tax implications that can come from the profits you make, but you are dealing with selling your own personal abode and all the memories that come with it.
Instead of letting this become a hassle, and finding out that you have a large tax bill at the end of the year, call the professionals at M-E Accounting and Tax Services. Our professionals will be able to work with you to help you qualify for the home sale gain exclusion, meaning that if you are single and selling your home, you may be able to exclude up to $250,000 in profits on the home without having to claim them on your taxes. Think of how much money this could save you! Rather than paying all these taxes, contact our professionals today.
What is This Deduction?
The home sale gain exclusion is meant to help homeowners keep some of the profits that they make when they sell their homes. If you are selling your home to move into a new home or to a new area, this exclusion will help to keep that money in your pocket rather than having you get taxed on it. Of course, if you are selling the home to make a profit or as part of your income, you will not be able to get this exclusion. If you are uncertain about whether the sale of your home would meet this exclusion or not, make sure to contact the professionals at M-E Accounting and Tax Services to get stated.
How to Qualify
If you are single and you sell your home and make a profit of $250,000 or less, you may be able to exclude this profit from your personal income during tax season. Married couples who file together will be able to exclude a maximum of $500,000. This is just one of the requirements, but helps you to know where to stand.
You must also own the property for a minimum of two years in the past five years, with the five years ending on the date you sell the home. You must also use this home for that two years as well. You don’t have to be in the home for two years straight though. If you purchased the home and lived there for a year, rented for a couple years, and then lived there again for another year, this would count. The point of this is to make sure that you are not purchasing homes, flipping them for a profit or income, and then excluding the profits that you make in the process. You must actually live and use the house as a primary residence in order to get the exclusion.
One other thing that you must keep in mind is that you are not able to use this exclusion more than once in a two year period. For example, if you purchased a home, sold it to move to another home, and used the exclusion, you will not be able to use this again for at least two more years. You also can’t sell two homes, such as a regular home and a vacation home, and get the exclusion at the same time. There are a few exceptions, such as if you purchased a new home and then had to move right away because of a new job, but make sure to contact M-E Accounting and Tax Services to see if you qualify.
Getting a Deduction, even when you don’t qualify
There are several instances where you can still get the home sale gain exclusion even if you don’t meet all the criteria. These are usually in affect when you have a life changing event that you were not expecting but which makes you need to sell your home before the time commitment requirement. For example, if you get a new job that makes you relocate before the time commitment or you need to sell your home early because of a severe health reason makes it impossible to stay in that home, you can sometimes qualify for the deduction, or at least a partial deduction, so you won’t have to pay taxes on all the money.
You should make sure to talk to the professionals at M-E Accounting and Tax Services before you sell your home, even if you don’t think you meet all the requirements of receiving the home sale gain deduction. There are several other determinants that can be used that can save you a lot of money if you have to sell your house, even if you do so against some of the listed requirements. Receiving even a partial deduction can save you a lot of money during tax season and will help you to move on to the next life situation.
When you are ready to sell your home and are worried about how the profits are going to affect your tax bill, make sure to contact Motaz Elkhouly with M-E Accounting and Tax Services, Inc. in Cape Canaveral, FL. Our professionals will be able to work with you to help you get this deduction so you can use your profits to purchase a new home or to help out with your retirement. Make sure to contact our professionals today to get started.
M-E Accounting & Tax Services, Inc.