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Advice
Posted in: Selling a home

Tax considerations when selling a home

Tax impact of selling a home

Homeowners interested in selling a home will need to factor how the home sale will affect their federal and state tax returns. It is also important you do your homework and know a few tips to increase your chances of a sale.

According to Realtor.com, it is a good idea to speak with a tax consultant on various issues, including:

  • Costs associated with the home
  • If you have acquired the home as a gift or from inheritance
  • Whether it was used for business or renting
  • Home renovations or additions

Additionally, you should speak with a tax consultant if you purchased the home using gains from a previous sale on which tax was put off before the enactment of the federal Taxpayer Relief Act of 1997. According to this act, a homeowner is allowed to keep capital gains on a home sale of up to $500,000 if they are married or $250,000 if you are single without being taxed. In order to qualify, you have to have owned the home as a principal residence for at least two of the last five years. A separate piece of legislation, the federal Internal Revenue Service Restructuring and Reform Act of 1998, went further and said those selling their home can pro-rate the exclusion if they were forced to sell their home due to a job change, illness or some other hardship of that nature, in order to meet the two-year residency requirement.

 

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Status Definitions

For Sale: Properties which are available for showings and purchase

Active Contingent: Properties which are available for showing but are under contract with another buyer

Pending: Properties which are under contract with a buyer and are no longer available for showings

Sold: Properties on which the sale has closed.

Contingent and Pending statuses may not be available for all listings