Selling a home is one of the biggest financial transactions you’ll make. You want to ensure every detail is covered so you’ll be successful. The following tips can help you understand the tax implications of selling and the factors that could influence your asking price or the length of time your property stays on the market.
- Making money from the sale of your home could have major tax benefits. If the house has been your primary residence for 24 months within the past five years, you may be able to exclude up to $250,000 of the gain from your taxable income ($500,000 on most joint tax returns).
- If you can exclude all the gain, you don’t need to report the sale on your tax return.
- Gains that cannot be excluded are taxable. You must report them on Form 1040, Schedule D.
- You cannot deduct a loss from the sale of your main home (defined as the only home you own or where you live most of the time during a given taxation year).
- When your home sale results in a loss, you don’t need to pay any tax on the money you received from the sale.
- For more information, see IRS Publication 523, Selling Your Home.
Home Sale Tips
There are several factors that can negatively impact your ability to attract homebuyers. Sometimes there isn’t much you can do (such as being located on a busy street), but there are generally a few changes you can make to boost your home’s marketability:
- If your interior or exterior walls are painted with bold colors or textures, it might be worth toning it down with a more neutral palette.
- If you can afford it, have your home professionally staged, as it can show off a home’s strong points (while hiding its defects).
- Consider upgrading older appliances, cabinetry and plumbing fixtures. The same goes for worn floors or carpeting. Discuss with your real estate agent which improvements might be worth the investment.
- Make sure your yard is well-tended and has some basic landscaping. An inviting exterior free of weeds and clutter can help your curb appeal.
There are also actions you can take to improve the neighborhood:
- If there are foreclosed homes in the neighborhood, chances are they aren’t being well-maintained. Get the contact information of the lenders taking over these properties so you can report problems such as vandalism, trash or an overgrown yard. If they’re unresponsive, ask your city’s building department whether they can charge fines or penalties.
- Work with your neighbors to keep an eye on empty homes. Take turns mowing the lawn, picking up trash and removing graffiti. Anything you can do to bring up the quality of the neighborhood will improve your chance of selling.
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