Home Selling Tax Tips

Posted by on Sep 3, 2013 in Planning | 0 comments

Money smallerNow that the housing market has improved, many people who were thinking of selling their homes have decided that now is the time to act.  But what are the tax implications?  The IRS has compiled a list of tips for individuals selling their main home in 2013 that you should keep in mind.

  1. If you sell your home at a gain, you may be able to exclude part or all of the profit from your income.  This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.
  2. You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return).  This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.
  3. If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.
  4. If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return.  You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.
  5. IRS Publication 523 Selling Your Home can be a helpful resource  in figuring the gain on the sale of your home.
  6. Generally, you can exclude a gain from the sale of only one main home per two-year period.
  7. If you have more than one home, you can exclude a gain only from the sale of your main home.  You must pay tax on the gain from selling any other home.  If you have two homes and live in both of them, your main home is usually the one you live in most of the time.
  8.  Special rules may apply when you sell a home for which you received the first-time homebuyer credit.  See Publication 523 for details.
  9. You cannot deduct a loss from the sale of your main home.
  10. When you sell your home and move, be sure to update your address with the IRS and the U.S. Postal Service. File Form 8822, Change of Address, to notify the IRS.

If you have questions about the tax treatment on selling your home, contact Mary Ellen Fillo at Fillo Financial LLC to set up an appointment to go over your particular situation.