Did you sell a home last year? Then your tax return just got a lot more complicated. Gains from real estate sales are taxable. That means, unless you qualify for an exclusion, you owe tax on any profit from the sale of your home.
The good news is that many home sellers do qualify for an exclusion, although the rules can get complicated fast. The basic rule of thumb is that each taxpayer can exclude from their taxable income up to $250,000 from the sale of their primary residence, if the necessary ownership and occupancy requirements are met. For most married taxpayers who are filing jointly, that means up to $500,000 from the sale of their primary residence can be excluded.
You’ll want to take note of these requirements and exceptions, however:
- Only gains from the sale of a primary residence can be excluded.
- Unless you meet the reduced exclusion qualifications, you must prove that you lived in the house for at least two years as your main home.
- Only one exclusion is allowed in each two-year period (ending on the date of sale), unless the reduced exclusion comes into play.
- If you do not meet the qualifications for the full exclusion, you may still be eligible for a partial exclusion if the home was sold because of changes in employer, health, or other qualifying unforeseen circumstances.
If you need help understanding the nuances of these complicated tax rules, Taxation Solutions, Inc. is here for you. Serving clients throughout the Atlanta metro and beyond, our tax professionals are available for tax preparation as well as tax problem resolution. We’re committed to helping our clients with all of their tax services, large and small, so don’t hesitate to call now with your questions.