Hello my friend and thank you for your question
If you sold your primary home that you have lived in it for more than 2 year out of five years you owned it and you have not sold other home within 2 years, then you can exclude gains up to $250,000 if single or $500,000 if married filing jointly.
If you are using Turbo Tax you will go to Sale of Home on Less Common Income in Wages & Income. It will ask you for the selling price and sales expenses. Sale expenses are the following, which you can find it in the sellers column of the settlement contract;
- Commissions
- Appraisal fees
- Broker's fees
- Legal fees
- Advertising fees
- Home inspection reports
- Title insurance
- Transfer taxes or fees
- Geological surveys
- Loan charges or points
- Any fees
There is no effect on the market value of your property. You normally use the cost basis of your property to calculate the gain. The cost basis is the cost of your property, plus any improvements. If you used your home for business purposes you need to subtract depreciation, such as home office or rented to the cost basis.
For example: You sold your primary home that you lived for more than 5 years and did not sell other homes within 2 year. If your property cost $210,000.00. You replace entire roof, add carpet to all the house, add another room, remodel the kitchen and bathroom for a total of $50,000.00 then the total cost basis is your cost $210,000 plus the improvements of $50,000 equals to $260,000.00. If you sold the house for $500,000 then you made $240,000 gain. If you are single you can exclude up to $250,000 so you do not have to pay any taxes.
You can find more information at Publication 523 at https://www.irs.gov/pub/irs-pdf/p523.pdf
Also you can find at https://www.irs.gov/taxtopics/tc701
I hope this answered your question
Martha
