This year, The Internal Revenue Service (IRS) began accepting tax returns on January 29, 2018, with nearly 155 million individual tax returns expected to be filed in 2018. The nation’s tax deadline will be April 17 this year – so taxpayers will have two additional days to file beyond April 15.
Question: Did you know that you can exclude up to $250,000 for an individual or $500,000 for a married couple from your taxable income when you sell your home? The profit that you create by selling your property can be yours, tax free, as long as you meet the requirements.
To exclude the full portion of the money you make from the sale of your home, you will need to have lived in your house as a primary residence for at least 24 months in the 5 years previous to the sale date of the property. This is considered the 2 in 5 rule.
If you do not meet the minimum occupancy requirement you still may be able to exclude a portion of your gains if you are selling your house because of circumstances related to your health or to your job.
If this property is a real estate investment, your profits will be considered taxable income and will be subject to state, federal and self-employment taxes. You can defer all capital gains taxes in a 1031 exchange if you are planning to reinvest the proceeds of your real estate sale into a new property.
Especially given the new Tax Rules, it's always a good idea to speak with your accountant or a certified tax specialists to understand the full impact that selling your home will have on your tax liability.
2018 vs. 2017 TAX BRACKETS:
There are still seven tax brackets under the new tax rule, but they’ve been adjusted slightly: 10, 12, 22, 24, 32, 35, and 37 percent. Compare those to the 2017 tax brackets: 10, 15, 25, 28, 33, 35, and 39.6 percent. Which bracket do you fall in?
Feel free to contact me anytime with questions you may have about the market value of your home. I'm just an email or a call away.