As a home seller, you may have focused much of your attention on the intricacies surrounding the actual sale of your home. You may have done extensive research on the prevailing market index, dutifully accomplished all the disclosure forms and collated a lot of information on mortgages and loans (for the benefit of the buyer, of course). In the midst of all the hoopla, you may have forgotten to check how selling your home would affect your taxes.Many factors may affect the taxes that you should be paying as a result from selling your home. Federal rules state that under certain conditions, capital gains of up to $500,000.00 (for couples) or $250,000.00 (for individuals) can be declared tax free if the home that you have sold was your main residence for at least two to five years.
Other conditions which may affect your tax accountability include whether you have used and declared your home as an office; expenditure incurred associated with selling your property; major and/or minor renovations which may affect capital gains; whether the home that you sold was purchased or acquired as a gift or form of inheritance.
Other factors such as losing a job or an unforeseen illness which has prompted you to sell your property before the mandatory two year residency period is up could be taken into consideration when computing for your taxes.
If you want to determine the full extent of your tax exclusion or exemption, it would be best to refer the matter to a real estate lawyer or a tax accountant. These individuals are more knowledgeable in the intricacies of the system. They too, would know what laws (federal or state) on real estate taxation could be applied to your situation. Remember that the laws governing real estate taxes are not the same all throughout the country, and different states usually have their own set of tax laws.
