Tax-time is upon us so I thought I’d give you some real estate tax tips.
If you sold your principal residence last year, you may be wondering if you will owe capital gains tax on any gain. Capital gains are the profits from selling your home. Put simply – Sales price minus selling expenses minus what you paid for the home minus any capital improvements over the years equals your profit. The good news is that if you lived in the home for at least two out of the last five years, you can avoid taxes on up to $250,000 in gain if you are single and $500,000 if you are married. There is no minimum age and you don’t have to reinvest the proceeds.
Now, if you are lucky enough that your gain is over those limits, you’ll want to make sure you are claiming all your allowed selling expenses. Your closing statement will list the obvious ones like the sales commission and other closing costs. But you can probably also deduct any repairs you had to make, and also the prep work you did to get the home ready to sell (paint, carpet, staging, etc.) as long as they were truly done in order to sell the home.
There were some major real estate tax changes in 2018. You can only deduct up to $10,000 for property taxes and state and local taxes. You can only deduct interest on a first mortgage balance of up to $750,000 (and nothing for a home equity loan) IF you got the mortgage after Dec. 15, 2017. If your loan is older than that, the limit is still up to $1M plus $100K for a home equity loan. And higher standard deductions means fewer people will decide to itemize their deductions.
THE INFO ABOVE IS GENERAL IN NATURE. I AM NOT A TAX EXPERT. PLEASE CONSULT ONE FOR YOUR SITUATION. If you have questions about real estate, call me at (925) 240-MOVE (6683). Voted “Best of Brentwood” multiple times. To search the MLS for free, go to: www.SharpHomesOnline.com. Sharp Realty. #01245186