Knowlopedia
Valued Contributor
Selling a home is an exciting milestone in life but one that requires careful consideration when it comes to taxes. The Internal Revenue Service (IRS) has specific rules for how homeowners should report profits from the sale of their primary residence on their income tax returns.
If you have owned and lived in the house for at least two out of five years before selling it, then up to $250,000 ($500,000 if married filing jointly) may be excluded from capital gains tax as long as certain criteria are met. This means any profit made on the sale will not be taxed by the IRS! However, if these requirements aren’t met or if more than $250K/$500K is earned from the sale then capital gains taxes must be paid based on current rates which range between 0-20%. Additionally state and local governments may impose additional taxes or fees depending upon where you live so make sure to check with them first before making any decisions about selling your home.
Knowing what kind of financial burden could potentially come along with selling a house can help prepare homeowners ahead of time so they don't get caught off guard later down the line when filing their return each year. It's also important to keep track throughout ownership all expenses related directly or indirectly towards maintaining/improving property value like repairs/renovations done over time since these costs can reduce taxable gain amount significantly at end-of-year calculations!
With all this information in mind now is an excellent opportunity for those considering selling their homes soon - take advantage today by consulting with qualified professionals who specialize in real estate taxation laws & regulations; they'll provide invaluable insight into how best manage finances associated with such transactions while minimizing potential liabilities due to scam.
If you have owned and lived in the house for at least two out of five years before selling it, then up to $250,000 ($500,000 if married filing jointly) may be excluded from capital gains tax as long as certain criteria are met. This means any profit made on the sale will not be taxed by the IRS! However, if these requirements aren’t met or if more than $250K/$500K is earned from the sale then capital gains taxes must be paid based on current rates which range between 0-20%. Additionally state and local governments may impose additional taxes or fees depending upon where you live so make sure to check with them first before making any decisions about selling your home.
Knowing what kind of financial burden could potentially come along with selling a house can help prepare homeowners ahead of time so they don't get caught off guard later down the line when filing their return each year. It's also important to keep track throughout ownership all expenses related directly or indirectly towards maintaining/improving property value like repairs/renovations done over time since these costs can reduce taxable gain amount significantly at end-of-year calculations!
With all this information in mind now is an excellent opportunity for those considering selling their homes soon - take advantage today by consulting with qualified professionals who specialize in real estate taxation laws & regulations; they'll provide invaluable insight into how best manage finances associated with such transactions while minimizing potential liabilities due to scam.
