What taxes do I pay when I sell my home?. When it comes to home selling, there are many factors that you need to consider in terms of possible payables that you would have to incur down the line. They are the repairs and renovations that you might have to do it on the property itself before selling, plus the real estate agents that you would have to contact to make the sale on your behalf.
The Capital Gains Tax
Other factors that might present the most difficulty to address are the Taxes involved in selling a house. If you ever plan to sell your Coral Gables house, you would have to pay capital gains tax. However, there are ways to lower and even avoid it entirely.
Some of these particular solutions will be discussed in the following paragraphs. If you would like to learn more about them, please do not hesitate to continue reading.
The Specific Tax Amount and Possible Exclusions
What taxes do I pay when I sell my home?. The specific amount of taxes that you would have to pay for the house once you decide to sell it will depend on how long you stayed in the said property. The profits also play an important part in determining how much tax you owe.
For example, if you owned and lived in a property for at least 2 to 5 years prior to the sale, you will have at least $250,000 worth of profits tax-free. This applies to single homeowners. However, if you are married and have filed a joint return, the tax-free amount will increase to at least $500,000.
The law will let you exclude this particular profit from your taxable income. However, if you sold for a loss, you will not be able to take a tax deduction for that loss.
This exclusion will take effect and could be used every time you sell any of your primary residences. As long as you own the property and lived in it for two years onwards until the sale pushes through, you will not have to pay a set amount.
However, the exclusion can be rendered invalid once you exceed profits wall and earn more than $500,000 for the house. The excess amount will be counted as capital gain.
Main Tax Break Criteria
You will be able to qualify for this tax break if you pass these criteria.
Ownership of the Property
You have to have owned the property for at least two years prior to the date of the sale. What taxes do I pay when I sell my home?. It does not have to be continuous or right before the sale occurs. If you let in the house for at least a decade as your main residence, then decided to read it out for a couple of years before selling it, this still qualifies you for a tax break.
A Joint Return
If you are married and would want to use in the $500,000 exclusion you have to file a joint return. In addition to this, at least one spouse should have full ownership rights to the property prior to marriage or at least 2 to 5 years prior to making the sale.
Otherwise, you will be liable to pay the capital gains tax that goes with profiting from the sale of your house.