FIVE Tax Deductions for SellersMarch 29, 2018
Which are there tax deductions when selling a home?
1. Selling costs
“You can deduct any costs associated with selling the home—including legal fees, escrow fees, advertising costs, and real estate agent commissions,” says Joshua Zimmelman, president of Westwood Tax and Consulting in Rockville Center, NY.
2018 tax changes: These deductions are still allowed under the new tax law.
2. Home improvements and repairs
Did you renovate a few rooms to make your home more marketable? they probably helped you fetch a higher sales price, and now you can deduct those upgrade costs as well. This includes painting the house, repairing the roof or water heater, or anything that remains useful past a year.
“If you needed to make home improvements in order to sell your home, you can deduct those expenses as selling costs as long as they were made within 90 days of the closing,” says Zimmelman.
2018 tax changes: None.
3. Property taxes
If you were dutifully paying your property taxes up to the point when you sold your home, you can deduct the amount you paid in property taxes for the time you owned it.
2018 tax changes: This deduction is still allowed, but your total deductions are capped at $10,000, Zimmelman says. You may be able to avoid this cap if you prepaid your 2018 taxes and if your property was assessed in 2017, but estimated assessments won’t qualify.
4. Mortgage interest: As with property taxes, you can deduct the interest on your mortgage (up to a maximum of $1 million) for the portion of the year you owned your home.
2018 tax changes: New homeowners (and sellers) can deduct the interest on up to only $750,000 of mortgage debt, though homeowners who got their mortgage before Dec. 15, 2017, can continue deducting up to the original $1 million amount, according to Zimmelman.
5. Moving expenses
If you sold your home in 2017 in order to move for a job change, you can deduct those expenses.
2018 tax changes: Lawmakers eliminated this deduction for most of us. However, members of the armed forces on active duty can still take the deduction.
so what ‘s up with capital gains tax for sellers?
And don’t forget a tax exclusion still available to home sellers on capital gains. Capital gains are your profits from selling a home. Those profits are taxed as income, but you can exclude up to $250,000 of the capital gains from the sale if you’re single and up to $500,000 if filing as a married couple. To be eligible, you must have lived in your home at least two of the past five years.
The only big catch is you must have lived in your home at least two of the past five years.
2018 tax changes: None. Lawmakers tried to change this rule, but it managed to survive—so it’s still one home sellers can cherish.
(However, look for this to possibly change in a future tax bill.
Ralph DiBugnara, president of Home Qualified and vice president at Residential Home Funding, says lawmakers would like to change this so that homeowners would have to live in the property for five of the past eight years, instead of two out of five)
Info source Realtor.com