This has been a busy year for real estate. Sometimes homes have been listed and sold almost instantaneously and at record prices. If you happen to be someone who sold your house (or are thinking about selling your house) this year, there are things to know about how it may affect your taxes.
Do you qualify to exclude any gain from your income from the sale of your property?
You, as the homeowner, must have owned the home and lived in it as your main home for at least two years during a five-year period ending on the date of the sale.
If you own more than one home, you may exclude the gain only from the sale of your main home. Any other home sale will require you to pay taxes on the gain.
You may exclude up to $250,000 of a gain from the sale of your main home as an individual, or $500,000 if filing a joint return with your spouse. If you choose to exclude the gain, you need not report the sale on your tax return. If you receive Form 1099-S (Proceeds from Real Estate Transaction), you must report the sale on your tax return and take the exclusion.
Loss from the sale of your property
If you, the homeowner, experience a loss from the sale of your main home (you received less than you paid for it), the loss is, unfortunately, not deductible.
What happens if you don’t qualify to exclude any gain to your income from the sale of your property?
If you don’t qualify to exclude all of the capital gain from the sale of your main home from your income (or choose not to claim the exclusion), the gain must be reported when you file your tax return.