Preparing for Tax Season
Spring is here and with that comes our favorite time of year…tax season! Actually, tax season is usually more of a headache than anything else. But there are a couple things you can do to make your life easier when the time comes. If you are thinking about selling your home this year, or if you already did last year, keep these tax deductions top of mind.
5 Advantageous Tax Deductions When Selling Your Home
Home Improvements and Repairs – Homeowners always have projects they want to complete before selling their home. Making repairs and improvements to a home is an important step in getting a higher value for your home when the time to sell comes. But if you want to take advantage of this tax deduction, timing is everything. This is one tax deduction that will not change with the new tax structure in the upcoming year. If you are going to sell your home, make sure you do these repairs and improvements within 90 days of closing.
Selling Costs – There are so many costs associated with selling a home. Including but not limited to escrow fees, legal fees, real estate commissions, advertising and marketing costs, the list could go on and on. But there is a silver lining! All these costs are tax deductible This could even include the cost of staging your home. Yes, you read that correctly. ALL these costs are tax deductible, and you don’t have to worry about these going away as these deductions are here to stay in 2018.
Moving Expenses – Did you sell your home to move cross-country this year for a job change? How about across the county? Across the city? If the answer to any of these questions is yes, then you’re able to deduct your moving expenses in 2017. Unfortunately, this has been removed from the 2018 tax plan, but if you are an active member of the armed forces, you can still take this deduction moving forward.
Mortgage Interest – For the portion of the year that you owned a home in 2017, you are eligible to take a maximum deduction of $1 million on your mortgage interest. However, keep in mind this amount has drastically changed moving into 2018. The amount of deductible mortgage interest allowed for new homeowners and sellers in 2018 is $750,000. Although if you got your mortgage before December 15, 2017, you can continue to deduct the original $1 million.
Property Taxes – Did you pay property takes up until you sold your home in 2017? If so, you can deduct the amount paid while you owned the property. This deduction will still be around in the future, but the new cap is $10,000.
BONUS ADVANTAGE: Capital Gains – This is more of an exclusion than a deduction, but who’s it’s still a benefit when selling. If you sold your home last year and made a profit after all of your expenses were paid off, up to $250,000 of capital gains can be excluded as income if you are single, or up to $500,000 if you are married. The only requirement here is that you must’ve lived in your home two of the last five years.
Invest in Yourself
If you’re thinking about selling your home, now’s the time to enter the market. Whether you’re planning to use your capital gains to purchase your next investment property or using your tax return to upgrade to an ocean view home, I want to help you invest in your dream home. Contact me today to sell your home and invest in your future.