Seller Tax Saving Tips

Are you thinking about selling your Huntington Beach or Orange County home in 2015?  Once you are ready to put your home on the market there are many things to consider.  Taxes, yes, that’s right,  do you know what the tax implications are of selling your home? Here are some tax saving tips for you to consider

1.  Know what can be excluded.  The tax code allows individuals to exclude up to $250,000 in profit from the sale of their primary residence, or $500,000 for married couples filing jointly.  That  means you can avoid paying capital gains tax if the profit does not exceed $250,000 ($500,000 couples)

2.  Qualifications:  To be able to use the tax  exemption, you have to meet certain home ownership and timing criteria.  You must have owned the home for at least 2 of the 5 years before the sale.  Also, you have to have lived in it as your primary residence for at least 2 out of the last 5 years.   You can not use this exclusion if you’ve already taken it in the last 2 years.

3.  Partial exemption.  If you don’t meet the basic qualifications, you may qualify for a partial exclusion.  Generally, if you sell your home due to circumstances involving divorce, change in employment, change in health or other unforeseen circumstances, but don’t meet the ownership, use, and timing qualification, you may qualify for a reduced exclusion.

4.  Selling Expenses.  If  you don’t qualify for the exemption or you exceed the capital gains exemption amount you can save a substantial amount by keeping track of your expenses.  You are allowed to deduct some of these expenses from the sales price.  The costs associated with selling your home such as, advertising, appraisal fees, attorney fees, closing fees, document fees, escrow fees, mortgage satisfaction fees,  commissions paid, recordings, cost of removing title clouds, settlement fees, title search fees, transfer or stamp taxed charged by city, county or state.

5.  Physical improvements:    If you make substantial improvements to your home, even if you did them years before you started actively preparing your home for sale, you can add the cost to its tax basis.  This will reduce the amount of any taxable profit from the sale.  For tax purposes, a home improvement is any expense that materially adds to the value of your home, significantly prolongs its useful life, or adapts it to new uses.  These may include: additions, new insulation, pipes or ductwork, replacing floors and walls, upgrading heating or AC, installing new landscaping, installing new fences, walls, porches, patios, decks, replacing or upgrading driveways, walkways, roofs, window, doors, or built-in appliances.  Most important, KEEP YOUR RECEIPTS

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