Who knows about tax tips for selling? Most don’t, and that’s ok. It’s almost that time of year when tax season is upon us once again! If you are selling a house in TX, you will love these tax tips for selling your Dallas / Fort Worth house! This article is for informational purposes only, so keep that in mind!
For specific questions, it’s always best to contact a trusted tax professional in your area, 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 that your address is updated with the IRS.
Ready for more tax tips for selling? Keep reading!
Other Exclusions
If you don’t meet the above requirements, 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 your property because of a job change, a change in your health or for other unforeseen circumstances, you will be able to write-off a portion of the profit.
Reporting the Sale
If you receive a 1099-S form from the closing agent, then you will need to report the sale to the IRS. This form provides the IRS with information regarding the proceeds from real estate transactions. If you find out that you are able to exclude all profits, then you may be able to let your agent know at the time of closing that you will not need that form issued. Even if you are able to deduct all profits, if the form is issued, then you will still need to file it with the IRS… even if you don’t owe any money.
Capital Gains Taxes
Selling an investment property or house that you have only owned for a brief time? If that’s the case, then you will likely be subject to the capital gains tax. Capital Gains taxes are dependent on how much money you make. If you have a lower income, you will pay little to no capital gains taxes. People in higher tax brackets can pay upwards of 20%. Did you know that short-term assets are typically taxed the same as ordinary income? So that’s definitely something that you should keep in mind. Here are a couple more tax tips for selling…
First-Time Homebuyer Credit
Depending on the dates you bought and sold the property, you might have to pay back all or part of the credit you received. Typically if you sell your house 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. So make sure you do your homework before selling the house so that you’ll know what to expect if you did receive a first-time homebuyer credit. Still want more tax tips for selling a Dallas / Fort Worth house? We’ve got more for you…
Deduct Selling Costs
When selling your Dallas / Fort Worth house, you will be able to deduct any reasonable cost when selling your home. This includes the improvements made in order to sell the house, closing costs, assessments, marketing costs, agent fees and so on. Keep track of every cent you spend in an effort to sell your home. When tax time rolls around, 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. Yes, these tax tips for selling a Dallas / Fort Worth house can be a great place to start, but we certainly recommend consulting your agent, attorney, and accountant to make sure you have set up the best terms possible for yourself.
Don’t stress too much about taxes when putting your house up for sale in Dallas / Fort Worth. Sometimes things happen in life where you need to sell fast no matter the tax ramifications. If you’re needing a fast sale of your property and looking for a fair cash offer, we can help! Odds are in the grand scheme of things that Uncle Sam won’t be getting his hands on your profits.