Are you thinking of selling your home? If so, there are a few options. If it’s run down or you’re in need of a quick sale then you can go to https://benbuysindyhouses.com. If you’ve already got someone who is interested in your house then you can sell it independent of any realtor. Or, if you want to sell it through a real estate agent, you will need to find one who will work with you and take account of your needs.
Of course, you will need a house valuation before you put it up on the market, as without one you won’t know what price to put it up for. Once you have found this out, you are ready to sell your home. But you might be interested to hear that you may qualify to exclude from your income all or part of any gain from the sale of your main home. Your main home is the one in which you live most of the time. You may want to look into how to sell house fast, especially if you have to move quickly and need the money for your new home. Below is a guide to how and where you might be able to exclude gain from any property sales in your tax return. If you are at all confused by this, don’t worry. There are tax services like H&R Block that can help you with your tax preparation, and you can use sites like Raise to see if any discounts are available.
Ownership and Use Tests
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
- Owned the home for at least two years (the ownership test)
- Lived in the home as your main home for at least two years (the use test)
Gain
If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
- If you can exclude all of the gain, you do not need to report the sale on your tax return
- If you have gain that cannot be excluded, it is taxable. Report it on Schedule D (Form 1040)
Loss
You cannot deduct a loss from the sale of your main home.
Real Estate Sales Worksheets
Worksheets are included in Publication 523, Selling Your Home, to help you figure the:
- Adjusted basis of the home you sold
- Gain (or loss) on the sale
- Gain that you can exclude
Reporting the Sale
Do not report the sale of your main home on your tax return unless:
- You have a gain and do not qualify to exclude all of it,
- You have a gain and choose not to exclude it, or
- You have a loss and received a Form 1099-S.
More Than One Home
If you have more than one home, you can exclude gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
Example One:
You own and live in a house in the city. You also own a beach house, which you use during the summer months. The house in the city is your main home; the beach house is not.
Example Two:
You own a house, but you live in another house that you rent. The rented house is your main home.
Business Use or Rental of Home
You may be able to exclude your gain from the sale of a home that you have used for business or to produce rental income. But you must meet the ownership and use tests.
Example:
On May 30, 1997, Amy bought a house. She moved in on that date and lived in it until May 31, 1999, when she moved out of the house and put it up for rent. The house was rented from June 1, 1999, to March 31, 2001. Amy moved back into the house on April 1, 2001, and lived there until she sold it on January 31, 2003. During the 5-year period ending on the date of the sale (February 1, 1998 – January 31, 2003), Amy owned and lived in the house for more than 2 years as shown in the table below.
| Five Year Period | Used as Home | Used as Rental |
|---|---|---|
|
2/1/98-5/31/99 |
16 months |
|
|
6/1/99-3/31/01 |
22 months |
|
|
4/1/01-1/31/03 |
22 months |
|
|
38 months |
22 months |
Amy can exclude gain up to $250,000. However, she cannot exclude the part of the gain equal to the depreciation she claimed for renting the house.
These real estate tax tips were copied from the IRS’s website: https://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Itemized-Deductions,-Standard-Deduction/Real-Estate-(Taxes,-Mortgage-Interest,-Points,-Other-Property-Expenses)
Are you looking to sell your home in northwest Montana or buy a new home in the Whitefish Montana area? Take advantage of this upward trend in Flathead real estate and give us a call today to discuss whether now is a good time for you to buy or sell real estate in northwest Montana.
