There are many homeowners that are taking advantage of the huge profit they can get out of selling their home in a market where houses cost more than they ever have. When it comes to selling your house and making a profit, you may be wondering if you are going to see tax implications that come from that. You want to make sure you are taking full advantage of any profit you make on the sale of your home. Mark Dicus & Company is here to share some tax tips to help you make the most of the profit that you make from selling your house.
How to Get the Most Out of Your Home Sale
Anyone that sells their home wants to be able to take full advantage of any profit that they make from the sale. Here are some tips as far as your taxes are concerned, that will help you achieve that goal.
– Profit Could Be Tax Free: If you stand to make a significant profit on the sale of your home, there is a chance that you can enjoy that money tax free. If you have lived in the house for two of the last five years with that as your primary address, you can make up to $250,000 profit on it without paying taxes on it. If you are a married individual, you can double that number and stand to make up to $500,000 on the sale of your home without paying taxes on the money.
– Include Home Improvements: It is important that homeowners understand that the improvements they make to their homes can count towards money in their pocket as well. You need to add all of the costs that were included in the renovations in the base price of your home. This would include things like a kitchen remodel, new roof, finished basement, additions and more. For instance, if you paid 400,000 for your home and sold it for 900,000, you might think that you made 500,000 on the sale. However, if you put 150,000 into renovating and improving it, you would have actually only made 350,000 profit.
– Realtor & Lender Fees: You can also decrease the amount of money you spend on realtor and lender fees from your base price of the house too. This can help you keep more of that money in your pocket if you are getting close to the limits.
– Reporting Sale of Home to IRS: Most of the time, homeowners don’t have to report the sale of their home to the IRS at tax time. The only time you would is if you get Form 1099-S which you can avoid getting at closing when you certify that you have met the ownership, use and timing tests.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you are getting ready to sell your home and have some questions about what that means for your taxes, you can turn to Mark Dicus & Company to give you the answers you’re looking for. Call us today!