Homeowners who are selling their home soon or sold it last year will want to educate themselves on the tax deductions available.
You can deduct many costs associated with selling the home and some deductions might include lawyer fees and real estate agent commissions.
If you have done renovations to make a home more marketable some of those cost may be eligible for a tax break. Did you need to make repairs or improvements to sell your home? Some of those expenses can be deducted as selling costs as long as they were made within 90 days of the closing.
One other deduction might be the amount you paid in property taxes for the time you owned the home. This has been capped at $10,000 in total deductions, starting in 2018.
You can deduct the interest on your mortgage for the amount of time you owned the home. Starting in 2018, new homeowners and sellers can deduct the interest on up to $750,000 of mortgage debt. Homeowners who had a mortgage prior to Dec. 15, 2017, can continue to deduct up to $1 million under the old law.
A tax exclusion is 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.
If you would like more information on the new tax laws and changes will affect homeowners/buyers please Denise Kopasz