Tuesday, August 1, 2023 / by April Castillo
Deductible Expenses when Selling a Home
When selling a home, there are certain expenses that may be deductible, depending on various factors such as the use of the property and the circumstances of the sale. Here are some common expenses that may be deductible when selling a home:
Selling Costs: Certain costs directly related to the sale of the property may be deductible. These can include real estate agent commissions, attorney fees, title insurance, escrow fees, advertising costs, and inspection fees.
Home Improvement Expenses: If you made qualifying home improvements or renovations before selling your home, some of those expenses may be deductible. These expenses can include the cost of additions, upgrades, or enhancements that directly improve the property's value or extend its useful life. It's important to note that routine maintenance or repairs are generally not considered deductible.
Capital Gains Tax Exclusion: If you meet the eligibility requirements, you may be able to exclude capital gains from the sale of your primary residence from your taxable income. As of the current tax laws, you can exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) if you have owned and used the property as your primary residence for at least two out of the five years preceding the sale. This exclusion can result in significant tax savings.
Home Office Deduction: If you used a portion of your home exclusively for business purposes and claimed a home office deduction in previous years, you may be subject to a partial recapture of the depreciation you claimed. The recaptured depreciation can potentially increase your taxable income.
It's important to note that tax laws can change, and the specific deductibility of expenses when selling a home can vary based on individual circumstances and local regulations. It's recommended to consult with a tax professional or accountant to understand the specific deductions available to you and to ensure compliance with applicable tax laws.
Selling Costs: Certain costs directly related to the sale of the property may be deductible. These can include real estate agent commissions, attorney fees, title insurance, escrow fees, advertising costs, and inspection fees.
Home Improvement Expenses: If you made qualifying home improvements or renovations before selling your home, some of those expenses may be deductible. These expenses can include the cost of additions, upgrades, or enhancements that directly improve the property's value or extend its useful life. It's important to note that routine maintenance or repairs are generally not considered deductible.
Capital Gains Tax Exclusion: If you meet the eligibility requirements, you may be able to exclude capital gains from the sale of your primary residence from your taxable income. As of the current tax laws, you can exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) if you have owned and used the property as your primary residence for at least two out of the five years preceding the sale. This exclusion can result in significant tax savings.
Home Office Deduction: If you used a portion of your home exclusively for business purposes and claimed a home office deduction in previous years, you may be subject to a partial recapture of the depreciation you claimed. The recaptured depreciation can potentially increase your taxable income.
It's important to note that tax laws can change, and the specific deductibility of expenses when selling a home can vary based on individual circumstances and local regulations. It's recommended to consult with a tax professional or accountant to understand the specific deductions available to you and to ensure compliance with applicable tax laws.
