2016-09-09 / Business News

Home Sale Tax Break

REAL ESTATE CORNER
by Robin Shapiro

If you sell your home and have a capital gain then you may be able to exclude up to $250K of the gain (or $500K for married couples) from your tax return. There are provisos: the home must have been your primary residence for at least two of the previous five years; and you must not have used this exclusion during the past two years. In other words, theoretically you can do this every two years if you are fortunate enough to buy a home (live in it) and flip it for a profit.

The IRS does provide an exemption to the two year rules for use and ownership if the reason for the sale is health, place of employment, etc.

The capital gain is computed by subtracting closing costs, your original purchase price, and the cost of any improvements from your selling price. It’s a good idea to check with your accountant on the application of these ideas. Home improvements are usually considered to be items such as new plumbing, wiring, or anything which adds value to your home. In general, things which prolong the useful life of the home are appropriate.

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Robin Shapiro: 718-490-9463

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