If there is one sure thing about life in the U.S from a financial standpoint, it is this: taxes and profits go hand-in-hand. This includes the sale of a home. However, if you meet certain criteria, there are enough credits, exceptions, and exclusions to make the entire process surprisingly light on taxes. In fact, many homeowners are able to escape tax-free as long as certain conditions are met.
Profit Exclusions
Any single person selling his or her primary residence can treat as much as $250,000 profit from the sale as tax free. That amount doubles for married couples who file jointly. You can use this exclusion every time you sell your primary residence provided that you lived in the property for at least two years and have not received the exclusion for the sale of another home within the two years prior to this sale.
Exceptions to the Rules
There are some instances where you can receive a partial exclusion on the profits from your home sale even if you haven’t lived in the home for the full two-year period.
If you have a change of employment that forces you to sell your home for financial reasons or the purpose of relocation, for instance, you may claim a portion of the funds. This is also true in the event of divorce, multiple births from a single pregnancy, and other factors.
If you have questions about maximizing your tax exclusions from the sale of a home, now, before the sale takes place, is the perfect time to consult us to get the answers you need. Call 949-759-5626 and ask for Jerry.
Morey and Associates is an Orange County CPA Firm with an expertise in real estate accounting. We work with real estate property managers, real estate investment trusts and investment groups of all kinds. We have two conveniently located offices to service the entire Orange County California area.