Are you thinking about selling your home? If so, you may be wondering about the potential tax implications of the sale. One of the key tax concerns when it comes to selling a home is capital gains. In this post, we’ll explain the basics of capital gains and how they apply to the sale of a home.
First, it’s important to understand that capital gains are the profits that are realized when an asset is sold for more than its purchase price. In the case of a home, this would be the difference between the price at which you bought the home and the price at which you sell it.
When it comes to capital gains taxes, there are two important exclusions to be aware of. The first exclusion applies to homeowners who have lived in their home for at least two of the five years preceding the sale. This means that if you’ve lived in your home for at least two years, you won’t have to pay capital gains taxes on the first $250,000 of profit if you’re single, or the first $500,000 of profit if you’re married filing jointly.
The second exclusion applies to homeowners who have experienced a significant life event, such as a job loss, divorce, or the death of a spouse. In these cases, the homeowner may be able to exclude a portion or all of the capital gains from the sale of their home.
It’s important to note that these exclusions only apply to the sale of a primary residence. If you own a second home, such as a vacation property, the rules for capital gains will be different.
If you’re planning to sell your home and you’re concerned about capital gains taxes, it’s a good idea to talk to a tax professional. They can help you understand the specific rules that apply to your situation and advise you on the best course of action to minimize your tax liability.
In conclusion, capital gains can be an important consideration when it comes to the sale of a home. By understanding the exclusions and rules that apply, you can take steps to minimize your tax liability and maximize the profits from the sale of your home.
Ready to sell or just have questions? I’m always ready to talk real estate! Call or Text 405-535-4460
Luke Walker, Realtor© – Ariston Realty