03/25/2023
Ah, the joys of home ownership! You’ve put in the time, effort, and love to make your house a home. But now, it’s time to move on to bigger and better things. Before you start packing up those boxes, it’s important to understand the tax implications of selling your home. Because let’s face it, nothing ruins a good time like the tax man coming to collect his share.
here are a few key points to keep in mind:
✔️Capital gains tax
If you sell your home for more than you originally paid for it, you may be subject to capital gains tax. The amount of tax you owe will depend on how long you’ve owned the property and your tax bracket.
✔️Depreciation recapture
If you’ve taken advantage of depreciation deductions on your rental property, you’ll need to pay back a portion of that depreciation when you sell the property.
✔️State and local taxes
Depending on where you live, you may owe state or local taxes on the sale of your home.
✔️Exclusion of gain
If you’ve lived in your home for at least two of the past five years, you may be eligible for the exclusion of gain. This allows you to exclude a portion of your capital gains from tax.
Remember…It’s always a good idea to consult with a tax professional when selling your home, as every situation is unique and there may be other tax implications specific to your case.
