How to reduce or avoid tax when selling a home
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How to reduce or avoid tax when selling a home
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1025. If you’re considering selling a home, you may wonder how it will affect your taxes. Laura answers a listener’s question on this topic and explains how to use a legit, massive tax exclusion that allows many homeowners to skip home sale taxes altogether.
Key takeaways
- Selling an asset, such as a home, for a profit results in capital gains tax, with a rate that depends on your income and how long you owned it.
- The Section 121 exclusion, known as the home sale capital gains tax exclusion, allows eligible single taxpayers to exclude up to $250,000, or joint tax filers up to $500,000 of capital gains on their primary residence.
- Homeowners qualify for the gains exclusion if they owned and lived in the home for at least two years during the five years preceding the sale.
- There are legal exceptions where you qualify for the full or partial gains exclusion even if you sell your home before living in it for two of the previous five years.
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Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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