People,
especially people who are considering putting their houses on the market, often
wonder if they will have to pay taxes on the sale of their home.
The
answer to that is, fortunately, in most cases, no! Unless you have gains of
over $250,000 for single individuals and over $500,000 for married couples, you
typically will not have to pay taxes.
There
is no age requirement related to this rule as there once was either. Today, all
people are entitled to avoid paying taxes on home sale profits up to the
amounts specified above, providing that they have lived in the home for at
least two years.
Keep
in mind, though, that you only get to use this exclusion on one home. If you
exclude gain from another home within the same two year period, you will not
qualify for the exclusion again.
If
you’re unsure about how to calculate capital gains and how to make sure you’re
within your limits, you can do so by subtracting any selling costs minus the
cost basis from the original price of the home that you paid.
On
the off chance that you do go above the allowed limits, you will have to pay
taxes on the money above the exclusionary amount.
If
you have questions related to how the sale of your home will affect your taxes,
be sure to seek advice from a qualified tax professional. These professionals
can also help you to put the amount of money you make from selling your home to
good use. This money provides an excellent source for retirement savings and
more, so, no matter where you are in the home selling process, it’s definitely
smart to get some professional tax advice at this point!