If you’re planning to sell your home, here are some things you should know about taxes and the impact they may have on your decision to sell:
Primary residence: When you sell your primary residence, you can exclude up to $250,000 of capital gains from your taxes. For married couples who file jointly, the exclusion is $500,000.
Unmarried people who sell a jointly owned home can individually exclude up to $250,000, if each meets the criteria.
Criteria: You must have owned and lived in the home as your principal residence for at least two of the five years prior to the sale. And you cannot have sold a home in which you excluded capital gains for two years before selling your current home.
However, if you don’t meet these criteria, you still may be entitled to a whole or partial tax break in certain circumstances, such as divorce, change in employment status, change in health condition, or other unforeseen situations such as a death in the family.
What counts? When calculating the gain from sale of your home, you may deduct, among other things, closing costs (such as prepaid interest or points and your share of prorated property taxes) and selling costs (including real estate commissions; title insurance; legal, escrow and inspection fees; and advertising and administrative costs).
Also note: This information is not meant to replace advice from a professional real estate agent or a certified tax advisor or financial consultant.