topic Home sale in Deductions & credits

Home sale

Georgietaxes — Wed, 12 Feb 2025 19:03:23 GMT

We sold our house in June 2024, started building new home Feb 2024. Built new home for price we sold old home. Reinvested all the money from sale of home. What deductions and forms do I need to fill out.

Re: Home sale

KrisD15 — Wed, 12 Feb 2025 19:05:13 GMT

To clarify.

How long did you own and how long did you live in the first home?

Re: Home sale

Georgietaxes — Wed, 12 Feb 2025 19:14:36 GMT

30 years

Re: Home sale

KrisD15 — Wed, 12 Feb 2025 22:49:15 GMT

If you lived in the home at least two of the five years before selling, you needn't report the sale unless the profit from the sale is more than 250,000, or 500,000 if filing Marred Filing Jointly.

There was a time where you had to roll the funds into a new home or pay capital gains, but that has been revised.

There are no deductions for building a new home. (other than perhaps energy credits)

Keep the documents to figure the cost of the home in case things change in the future, such as making it a rental.

HOME SALE EXCLUSION LINK

Re: Home sale

Georgietaxes — Wed, 12 Feb 2025 19:22:14 GMT

What can I deduct from sale of house. Closing cost, fees,realtor fees.

Re: Home sale

Georgietaxes — Wed, 12 Feb 2025 19:23:01 GMT

Also money was rolled over into new home

Re: Home sale

KrisD15 — Wed, 12 Feb 2025 23:13:24 GMT

Yes, those fees (Closing costs, realtor fees) may be deducted from the proceeds of the sale.

First you'll take your cost, add any improvements, such as a room addition.

Next, you can deduct closing costs (or add then to the basis)

According to the IRS:

"Some settlement fees and closing costs you can include in your basis are:

Abstract fees (abstract of title fees),

Charges for installing utility services,

Legal fees (including fees for the title search and preparing the sales contract and deed),

Recording fees,

Survey fees,

Transfer or stamp taxes, and

Owner's title insurance."

Sales commission would also be an expenses.

What you "rolled over" to build the other house does not get accounted for in any way. That will just add to the basis of the new house.

If the "profit" on the sale of the house is LESS THAN $250,000, (or $500,000 if you file Married Filing Jointly) you won't need to report the sale of the home as long as you meet the other requirement, such as living in the home at least 2 of the previous five years. CLICK HERE for information about the Home Sale Exclusion

However, if the profit is over, the excess will be Capital Gains. You can't roll over property gains on a personal residence.

Since you owned the home for thirty years, the home may have appreciated quite a bit and you may be over that 250,000/500,000 limit, so I thought I should edit my answer, in case you do need to report the sale.

HERE is an IRS link with more information

TurboTax will walk you through it.

[Edited 02/12/2025 I 3:09pm PST]

@Georgietaxes