Tax Rules – Profits from Sale of Residential Home
If there is one sure thing about life in the U.S from a financial standpoint, it is this: taxes and profits go hand-in-hand. This includes the sale of a home. However, if you meet certain criteria, there are enough credits, exceptions, and exclusions to make the entire process surprisingly light on taxes. In fact, many homeowners are able to escape tax-free as long as certain conditions are met.
Any single person selling his or her primary residence can treat as much as $250,000 profit from the sale as tax free. That amount doubles for married couples who file jointly. You can use this exclusion every time you sell your primary residence provided that you lived in the property for at least two years and have not received the exclusion for the sale of another home within the two years prior to this sale.
Exceptions to the Rules
There are some instances where you can receive a partial exclusion on the profits from your home sale even if you haven’t lived in the home for the full two-year period.
If you have a change of employment that forces you to sell your home for financial reasons or the purpose of relocation, for instance, you may claim a portion of the funds. This is also true in the event of divorce, multiple births from a single pregnancy, and other factors.
If you have questions about maximizing your tax exclusions from the sale of a home, now, before the sale takes place, is the perfect time to consult us to get the answers you need.
With the growth in real estate values in New York City, the tax exclusion rules are restrictive. Proper planning can often help you avoid (or lighten) the tax implications.
Feinsot CPA is a New York City CPA Firm with two convenient office locations in Midtown. Call us at 212-631-0320 and ask for Mark if you are searching for a CPA Firm focused on minimizing your tax obligations legally.