Have you sold your home recently? For taxpayers who have sold their home, they may qualify to exclude all or part of the gain from the sale when filing their taxes. Here are some things that homeowners should consider when selling their home:
1) Ownership & Use – To claim the exclusion, the homeowner must have owned the home and lived in it as their primary residence for at least two of five years on the date of the sale.
2) Multiple Homes – Taxpayers can only exclude the gain on the sale of their primary residence. Taxes must be paid on any gains from the sale of other homes, such as rental properties.
3) Gains – Taxpayers who sell their primary residence and have a gain can exclude up to $250,000 if filing single and up to $500,000 if filing a joint return with their spouse. If you are able to exclude all of the gain, you do not need to report the sale on your return unless you receive a 1099-S.
4) Losses – Loss from the sale of your primary residence are NOT deductible.
5) Mortgage Debt – In most situations, taxpayers must report canceled or forgiven debt as income on their tax return.
6) Exceptions – Some exceptions apply for individuals, including persons with disability, certain members of the military, intelligence, and Peace Corps workers.
Does this seem overwhelming? Elevate Accounting Solutions, LLC can help you navigate all these different scenarios! From providing tax tips for individuals who rent or own their home, we can assist with your tax preparation needs. Contact us today to schedule your free consultation!