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5 Terrific Tax Deductions When Selling a Home

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5 Terrific Tax Deductions When Selling a Home

Categories: Homes Planning Real Estate

Published 03/19/2020

Due to the evolving coronavirus pandemic Congress has officially rescheduled the final day to file your 2019 taxes to June 15th, 2020. With that in mind, you might be thinking about whether there are tax deductions when selling a home, and of course, there are! You may recall 2018's new tax code otherwise known as the Tax Cuts and Jobs Act, that changed a few guidelines for homeowners. But have confidence that if you sold your home last year, or intend to sell this year, expect some tax deductions that can still amount to sizable savings when you file with the IRS. Need a full summary of the considerable number of deductions (as well as tax exemptions or other write-offs) at a home seller's disposal? Look at this rundown to ensure you miss none of them.

1. Selling costs

These deductions are permitted as long as they are directly attached to the offer on the home, and you lived in the home for at least two of the five years before the transaction. Another point to remember: The home must be a primary living arrangement and not a venture property. You can deduct any expenses related to selling the home including lawful charges, escrow charges, advertising expenses, and realtor commissions. This could likewise incorporate home organizing expenses, simply remember that you cannot deduct these expenses in the same way as, say, mortgage interest. Rather, you subtract them from the business cost of your home, which in turn emphatically influences your capital gains tax.

2. Home upgrades and fixes

If you renovated a few rooms to make your home increasingly attractive to buyers (so you could receive a higher sales cost), you can deduct those update costs too. This incorporates painting the house or fixing the rooftop or water radiator. In any case, there's a trick, and everything comes down to timing. If you expected to make home improvements so as to sell your home, you can deduct those costs as selling costs as long as they were made within 90 days of the closing.

3. Property charges

This deduction is topped at $10,000, so in the event that you were faithfully paying your property taxes up to the moment that you sold your home, you can deduct the sum you paid in property taxes this year up to $10,000.

4. Mortgage interest

Similarly, as with property charges, you can deduct the interest on your home loan for the part of the year you claimed your home. Simply remember that under the 2018 tax code, new property buyers (and home sellers) can deduct the interest on up to just $750,000 of the mortgage debt, however property holders who got their mortgage before Dec. 15, 2017, can keep deducting up to the first sum up to $1,000,000. Note that the mortgage interest and property taxes are itemized deductions. This means that for it to work in your favor, all of your itemized deductions need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled to $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly. (For examination, it used to be $12,700 for hitched couples recording mutually.)

5. Capital gains tax for sellers

The capital gains rule is not actually a deduction (it's an omission), however, you're still going to like it. As an update, capital gains are your benefits from selling your home, whatever money is left in the wake of taking care of your costs, in addition to any outstanding mortgage debt. These benefits are taxed as income, but here's the good news: You can reject up to $250,000 of the capital gains from the deal if you're single, and $500,000 if married. The only catch is you had to live in your home for two of the previous five years. However, look for the rules of this exemption to perhaps change in a future expense bill.

Advent Properties, Inc. does not provide individual tax advice, and it is wise to consult with your tax advisor or CPA for specifics on your tax deductions. For more information and assistance with buying a home or selling your home, please contact Darryl Glass via. Phone at (510) 500-7531, or email If more convenient, schedule a call with Darryl below:

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