Tax Tips For Selling Your Wilmington House!

It’s almost that time of year… yes, tax season is almost upon us! If you are selling a house in Wilmington, you will love these tax tips for selling your home! This article is for informational purposes only!

For specific questions, contact a trusted tax professional, or the IRS! 

Not All Profits Are Taxable

You will be able to exclude a high portion of your profits so long as certain conditions are met. Typically, you will be able to exclude $250,000 from your tax return, and up to $500,000 if filing a joint return. (However, if you sell for a loss, you won’t be able to take a deduction for that amount.)

The deduction is only available when selling your primary residence, and can only be used once every two years. To qualify for the deduction, you must have lived in the residence for at least two of the past five years.

It is important that whenever you move, your address is updated with the IRS.

Other Exclusions

If you do not meet the requirements above, you might still be able to exclude a portion of your profits from your income tax. There are many special conditions you can meet in order to receive a prorated, tax-free gain. If you need to sell because of a change in your health, a job change or other unforeseen circumstances, you will be able to write-off a portion of the profit.

Reporting the Sale

You will need to report the sale if you receive a 1099-S form from the closing agent. This form provides the IRS with information regarding the proceeds from real estate transactions. To avoid reporting, make sure that you are able to exclude all profits. Let the agent know at the time of closing that the form will not need to be issued. Even if you are able to deduct all profits, if the form is issued, you will still need to file it with the IRS… even if no money is owed.

Capital Gains Taxes

If you are selling an investment property or house you have only owned briefly, you will likely be subject to the capital gains tax. Capital Gains taxes are dependent on how much you make. If you have a lower income, you will pay no capital gains taxes. People in higher tax brackets can pay upwards of 20%. Short-term assets are typically taxed the same as ordinary income.

First-Time Homebuyer Credit

Depending on the dates you bought and sold, you might have to pay back all or part of the credit you received. Typically if you move within 36 months of purchasing the home, the credit must be paid back upon the sale of the home. Special rules apply and can be found in Publication 523 from the IRS.

Deduct Selling Costs

When selling your Wilmington house, you will be able to deduct any reasonable cost when selling your home. This includes the closing costs, improvements made in order to sell the house, assessments, marketing costs, agent fees and so on. Keep track of every cent you spend in an effort to sell your home. Come tax time, this can amount to major deductions!

No matter what time of the year you sell, it is always important to seek the counsel of professionals. Consult your agent, accountant, and attorney to make sure you have set up the best terms for yourself.

Don’t stress too much about taxes when putting your house up for sale in Wilmington. Odds are Uncle Sam won’t be getting his hands on your profits.

Do you want to sell your house in Wilmington? We can help! Send us a message or give our office a call today! (910) 782-4882

Jerry

Jerry has been involved in real estate for over 10 years. He graduated High School and enlisted in the Army, where he excelled in the Elite Army Rangers. Unfortunately, he sustained a major injury during a training exercise and was honorably / medically discharged after 4 years of service. He decided to attend Appalachian State University for both his undergrad and grad school with emphasis on Systems Engineering and Virtual technologies. He went on to work for multiple fortune 100 companies as an Engineer. Jerry stumbled into real estate investing with his father after deciding to fix up an old house down the street from his childhood home. After that house Jerry never looked back. Since then Jerry has helped hundreds of homeowners in selling, buying, and renting properties. Jerry has a GREAT team that works day in and day out to help homeowners sell their properties to local investors like himself. Contact Jerry info@homebuyers-nc.com

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