Wednesday, February 24, 2016
Selling Your Home? What Can You Expect This Tax Season?
If your home recently sold or is sale pending do you know what income taxes you will be responsible to pay this tax season? The amount actually depends on the length of time you lived in your home. If your family has resided in your home for two of the last five years, single homeowners can earn $250,000 tax free! Some exceptions to this rule apply for those disabled, relocating for a job more than 50 miles away, or those in need of medical treatment. In these cases taxes can be prorated. The tax free number increases to $500,000 (exemption on the profit not sale price) for couples filing jointly. Capital gains taxes must be paid if your home is higher than your allotment. For homeowners who have had their homes less than a year, the regular tax rate applies.
If you are interested in calculating your personal gain, the following compilation is suggested by Time: "First subtract selling expenses such as agent commissions and other closing costs from the sale price. Then you need to calculate your basis. This is what you paid for your home, plus some of the closing expenses from the purchase, such as title insurance and recording fees (but not loan points or lender fees), and the costs of any permanent improvements, like a swimming pool or new addition. For more complete details, see IRS Publication 523." www.irs.gov/uac/About-Publication-523
Prior to selling a home, one should check with a CPA, Tax attorney and/or Estate attorney. For recommendations, give the Kohan & Associates team a call at 727-565-1658 or check out our website at www.Suncoasthome.com