Tax Considerations When Selling your Home in Chandler AZ
With all of the expense that can go into buying and selling a home, it’s good to be aware of what you can claim and how a home can benefit you come tax time. When the New Year rolls around and you’re sitting down to the task of completing your taxes, here are a few things that you’ll want to keep in mind. Always speak with your CPA before making any decisions. Buying a home carries a lot of consequences and liabilities that you must be aware of before you take this step in life.
Gaining from Capital Gains
In the event that you’ve made money off the sale of your home through a capital gain, it’s possible that you may be able to exclude this amount from your tax filing. If you’ve lived in the home you just sold for at least two of the five years before the sale date, not having to report this amount on your taxes may come as a financial win. If your home is an investment property you might be eligible for a 1031 exchange; however, the government allows you to keep the gain (not equity) from your home without paying taxes on it. There are stipulations that need to be answered by your CPA. Most homeowners won’t pay capital gains as they did decades ago, however, tax laws change daily.
Reporting Your Gain
If you have not lived in your home for two of the five years, you will have to report the sale of your home and the capital gain when you file your taxes. This is necessary whether or not you decide to claim the amount. If this happens to be the case for you, it’s a good idea to educate yourself on ‘Net Investment Income Tax’ before filing your return so you can ensure your claim’s accuracy.
A Two-Year Claim For Capital Gain
While there is definitely a great financial benefit in not having to report your gain in all situations, it’s important to be aware that you can only exclude any gain you’ve received from a home sale every 2 years. So, if it happens to be the case that you’ve moved more than once in the last few years, you will have to report any amount that you’ve made from these home sales. There again there are several exceptions that your CPA can answer for you.
Selling Your Home At A Loss
The boon of a capital gain is certainly ideal if you’ve made some money on your home, but if you’ve sold your home for less than you paid, you won’t be able to claim this. While the end result may be a bit disheartening, this amount cannot be deducted off of your tax return. Similar to other investments there is no tax benefit of a loss
Beyond the benefits of buying or selling your home, there are ways that your tax filing can be more pleasant next year if you know some of these tips. If you think you may be perusing the real estate market in the near future, you may want to contact your trusted real estate professional for more information. Thinking about selling your home in Chandler or Gilbert AZ? Give me a call and read my credentials. I am one of the Best Chandler Realtors, and Gilbert as well.