5 Tax Deductions for Home Sellers

We all know the IRS sucks, and they’ll take however much they can get. The IRS doesn’t typically care about your home sale unless you profit drastically from it. On the other hand, the IRS will grant home sellers tax deductions. In order to receive this you must itemize your taxes, as tedious as it is, it will be worth it in the end. Here are five tax deductions you ca n take advantage of when selling your home.

  1. 1.       Selling costs

If you fail to qualify for the 121 exclusion, you will surely owe taxes on whatever profit you happen to gain. So be sure to deduct all selling costs from your gain. And you can (and should) deduct your real estate agent’s commission, legal fees, title insurance, inspection fees, advertising costs, and escrow fees.

You can also qualify for a partial exclusion if you must sell your home due to certain circumstances like divorce, health problems, change in employment, or any other drastic life changing event.

  1. 2.       Moving Deduction

Moving expenses are on the table to deduct if you have to relocate for work. This includes transportation costs, storage costs, and lodging costs.

  1. 3.       Property tax deduction

Deducting your property taxes for the year you owned the home is fair game! Deduct the taxes every day you lived there, but not of the day the home sold.

  1. Home improvement

Every home could use an improvement somewhere, unless it’s perfectly built, which is super rare. If you make an improvement that will help sell your home, like replacing the HVAC system, a new roof, or new plumbing, they best be within 90 days of the sale to be considered selling costs, which are deductible!

  1. 5.       Points

If you chose to buy mortgage points to lower your interest rate when you refinanced your home, you could qualify for another deduction. Because you can deduct a proportional share of the points until the loan is entirely paid, when you pay off the loan through the sale, you are able to d3educt the remaining value of those points.

 

Tax deductions are inconsistent, changing form state to state. Check with your tax expert to see what the state offers. 

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