You’re in luck! Most of the profit from selling your home is tax-free. On top of that, there are deductions you can take to maximize the tax benefits of selling your home. We’ll guide you through reporting your home sale on your return. Here are some things to know.
1. You won’t be taxed on most of the profit from selling your home
As long as you owned and lived in the home for two of the five years before the sale, up to $250,000 of profit is tax-free. And if you’re married and file a joint return, that amount doubles to $500,000. If your profit from the sale is more than that, the excess is reported as a capital gain. Just tell us about your home and the sale, and we’ll determine what, if any, of the profit is taxable and report it accordingly.
2. If you itemize, you can still take real estate deductions for home expenses
Even though you sold your home, if you choose to itemize your deductions, you can deduct many real estate expenses like mortgage interest, insurance, points, property tax, and improvements. You can even deduct the interest and taxes charged at closing. Selling costs like real estate broker's commissions and title insurance are also deductible. We’ll guide you through claiming all of the real estate deductions you qualify for.
3. Losses aren’t tax deductible
While home-sale profits are taxed as gains, their losses are considered personal, and therefore not tax deductible. So if you sold your home for less than what you paid for it, you can’t claim that loss as a tax deduction. But there are still a lot of other deductions you can take to help minimize your liability. We’ll take you through all of the relevant ones you can claim, making the most out of this sale.