What Taxes Am I Responsible For If I Sell My Home?

What Taxes Am I Responsible For When I Sell My House?

One of the most important decisions you can make is selling your current home. Whatever the reason, whether your family has grown, your family has gotten smaller, you want a change of scenery, or you are having to relocate for work, the decision is almost never easy. Unfortunately, one of the least exciting things you will have to deal with when selling your home is the taxes that are included and how they will effect your finances. In an effort to help you understand them better, We Buy Waco Houses has prepared this brief guided with some basic information.

Is Paying Taxes When You Sell Your Home Required?

Yes, there is a good chance that you will need to pay taxes on the amount you make. This depends on how long you owned/lived in your current home. You might however make a profit, and the amount of profit you make can determine if you have to pay taxes or not. Think about it this way, if you have lived in or owned your current home for two years of the five year prior to the sale the the profit of $250,000 is tax free. This amount can even double to $500,000 if you are married and you and your spouse have filed a joint tax return.

Interesting fact: The law allows you to use the exclusion every time you are selling a primary residence, as long as you lived in/owned your home for two of the five year. There are however, requirements that must be met they are listed below.

  • A joint return must be filed.
  • A minimum, one spouse must have owned/lived in the property for at least two of the 5 years prior to making the decision to sell.
  • All spouses must have lived in this home for at least two of five years prior to the date of sale.

Is There a Way to Calculate the Profit From Your Home Sale on Your Own?

Yes there is. One of the first things you need to find out is, the basis cost of the property you are selling. Another thing you must take into consideration is the total amount you have spent already to buy your residence. You also want to make sure that you include the amount of money spent for any repairs, renovations, and/or improvements. Imagine this, say you spent $10,000 on the kitchen renovation, you should add this amount to your cost basis.

Next, you will want to do is subtract closing costs, realtor’s commissions, and other expenses from the total amount you sold your home for. For example, say your home’s price is $300,000 and you ended up having to pay $15,000 in fees, the total amount you made was $285,000.

Then you have one last thing to do. You need to subtract the cost basis from the total you made selling your home. If this amount does not exceed $250,000 you owe no taxes on the sale.

Is There a Reduced Exclusion You Can Pay for?

Yes you can. You can apply for a reduced exclusion to claim part of the tax break in the event that you don’t meet any of the above requirements. If you stayed in your current home for only a year, you can exclude up tp $125,000 of the profit you made from selling your home.

It is important to know that you will most likely have to have a really good reason to apply for and qualify for a reduced exclusion. Some examples may include but are not limited to, changes in employment, health issues, or any other family or medical circumstance that may have it deemed it necessary to sell your home immediately.

Can I Avoid Taxes In Any Way?

If you decide to sell your home, but do not want to pay any taxes then consider selling your Waco home fast to a cash Waco homebuyer likeWe Buy Waco Houses. They will purchase your home as is and won’t required you to spend any additional money on repairs and/or renovations. If you live in Waco or any other surrounding towns/cities and are wanting to sell your Waco house fast,  We Buy Waco Houses is ready to help! Our mission is to ensure the process of selling your home as easy and straightforward as possible. All you would need to do is contact us and include any and all information about your current home. Once you do that they will schedule a meeting with you to view the property. Then once the walkthrough is complete you will receive a cash offer from them with no obligation to you! Feel free to give them call if you have any questions or want any additional information!