Tuesday, July 31, 2012

Income Tax Benefits for Home Owners When Selling

According to U.S. income tax law, home owners have a possible capital gains exclusion from income tax on the sale of their "main home" - and can protect the gain on if they have lived at the "main home" for 2 out of the past 5 years.

Income tax on sale of your home

 When a taxpayer has owned and used the property as their main home for at least two years out of a five-year period right before the sale, they may be able to exclude up to $250,000 of capital gain (up to $500,000 if married filing a joint tax return).   

Each person's unique set of circumstances and facts applied to the tax rules will generally determine whether he/she is entitled to claim the capital gain exclusion on the sale of the "main home".    

IRS Publication 523, Selling Your Home - is an excellent resource and provides the rules, examples and worksheets for clarity. 

Your "main home" for income tax purposes could be your house, houseboat, mobile home, cooperative apartment or condominium.
   
This capital gains exclusion applies only to the sale of your "main home"  - Publication 523 explains rules that apply to a "main home", including:

  • determining a "main home" when a seller has more than one home
  • details on excluding the gain
  • possible reduced maximum gain exclusion
  • business and rental use of the home
  • taxable depreciation during rental period for the home

Be careful with this.  If you are home or property seller, you should contact an income tax professional to determine whether you are eligible to protect your gain on sale of your "main home" and property. 

____________________________________________

This is for information only and is not the providing of legal or tax services.  Source of information is IRS Publication 523, Selling Your Home

CB previews logo

Contact us about listing and sale of Orange County CA homes and real estate. ~ Professional REALTOR® agent representation and help for property owners, private trust estate representatives, estate administrators, executors and heirs, probate and trust attorneys, estate planners, income tax professionals, public guardians, fiduciaries, investor group managers, bankers, and individuals, with listing and sale of properties at Orange County, CA

Posted via email from Explore OC Homes

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home