Most people believe they have to pay the taxes on gains from the sale of their home, but did you know there’s a good chance you may not have to?!

Here are 8 tax facts to keep in mind if you’re selling your house this year:

1. Exclusion of Gain. “Gain” means the amount you receive over and above what you originally paid for your home. In order to be able to exclude on your taxes part or all of the gain from the sale, you must have owned and used the home as your main residence for at least two out of five years before the sale of it.

2. Exceptions. As with most anything, there are exceptions to the rules when it comes to the gain from the sale of your home. For example, people with disabilities as well as certain members of the military are offered exceptions on the taxation of their gain. Be sure to contact me so I can help you get a better idea of some of the other exceptions and savings you may be entitled to receive.

3. Exclusion Limit. The most gain you can exclude from your taxes if you file as single is $250,000; the limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.

4. Not all sales have to be reported. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return. What must be reported, however, is if you can’t exclude part or all of the gain or if you choose not to claim the exclusion. You must also report the sale if you get a Form 1099-S, Proceeds From Real Estate Transactions. If you do report the sale, be sure to review the Net Investment Income Tax Questions and Answers on IRS.gov or contact the office for more guidance.

5. Exclusion Frequency Limit. You may only exclude the gain from the sale of a main residence only once every two years. There are some exceptions to this rule that may apply as well.

6. Only the Main Home is Eligible. If you own more than one home, you may only exclude the gain on the sale of your main residence. The home you live in most of the time if considered your main home for tax purposes.

7. First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought your main home, special rules will apply to the sale. These rules can be tricky, so be sure to reach out a member of our team for specifications.

8. Loss Instead of Gain. If you sell your main home at a loss, you can’t deduct the loss on your tax return.

Bonus Tips: After you move into your new home, be sure to update your address with the IRS by filing Form 8822, Change of Address. The address to mail the update to is found on page two of the form’s instructions. Also, if you purchase health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of their area of coverage.

For more money saving tax tips and hacks, contact us anytime!