Owning your home can be a big deal. This is your own personal space that you can live in, love in, and laugh in. But what happens when you need to sell your home? Whether you are choosing to move to a new location for a job or you want to upgrade to a new home, you may have some questions about the home sale gain exclusion and how you can avoid having to count the sale of your home as personal income during tax time. At Kenneth Taylor Accounting Services, we will be able to help you meet the requirements for this exclusion to keep your tax bill low this season.
In order to get the home sale gain exclusion, there are a few ownership requirements that you must meet. Namely, you have to live in the home you are selling for at least two out of the previous 5 years. These years could be the first two years and then you rented out the house for three years before selling it. Or the two years could be split up in other ways, as long as the right amount of time occurred within five years.
This is an important requirement. This helps to show that the home was more of a primary residence, rather than an investment that made you money. If you did happen to use part of the property as an investment vehicle, such as renting it out when you weren’t using it, you must make sure you are claiming this on your tax returns as income. If you are unsure about whether the property qualifies or not, the professionals as Kenneth Taylor Accounting Services are here to help you.
For most taxpayers, you will be able to deduct the sale gain of your home up to $250,000. If you are filing a joint return with your spouse, you can sometimes get the exclusion up to $500,000. When you are ready to file for this exclusion, make sure to bring in all of the paper work that you have regarding the sale of this home. This makes it easier for Kenneth Taylor Accounting Services to help you determine if you meet this exclusion or not.
You must keep in mind that in order to receive this exclusion, this must be the first home you have sold in the past two years. This shows the IRS that you are selling the home for personal reasons, such as purchasing a new home or moving to a new area. If you try to sell more than one house a year, no matter what the reason, the IRS is going to see this as a profit for your family and you will need to report it as this on your tax return.
If you have already sold a home in the past two years and need to sell your current home, come in and talk to our professionals at Kenneth Taylor Accounting Services. We will be able to look at your tax return and help you to find all the deductions and credits you qualify for in order to lower your tax bill with this extra income.
If you are not the one who lives in this home, you may not be able to get this exclusion on the sale of your home. For example, those who purchase the home as an investment property and just use it out for renters will not be likely to receive this kind of tax credit. If you never lived in this home, or if the time you lived in the home has been more than five years ago, you most likely will not be able to claim this tax.
In addition, if you used any part of your home to make a profit, such as renting out the basement, you must make sure that you claim this income on your taxes each year. Individuals who invest in properties and flip them for sale right away must include the profit for each home on their tax returns. While this may be a great investment opportunity to help you out with your retirement or to make some money on the side, you will not be able to claim this particular exclusion because you are making a profit rather than using the home as your primary residence. If you are unsure about the primary use clause of this tax credit, you can contact the professionals at Kenneth Taylor Accounting Services to give you a hand.
Getting the home sale gain exclusion is a great way for you to sell your home without having to worry about that big gain in income negatively impacting your tax return. While you are not going to be able to get away with doing this all the time, there are some safeguards in place to help those who are selling their home because of life circumstances rather than to make a profit. When you need help getting this exclusion or with anything else on your tax return, make sure to contact the professionals at Kenneth Taylor Accounting Services.
When you are ready to file your taxes, don’t trust just anyone to help you out. Instead, contact Kenneth Taylor at Kenneth Taylor Accounting Services from Coalgate, OK. We can ensure that you receive the home sale gain exclusion as well as any other deductions you qualify for in order to keep money in your pocket this tax season!
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