Tax Break for Selling Your Home
By Pierre Mouchette | Real Property Experts LLC
Homeowners enjoy a tremendous tax benefit upon resale. Internal Revenue Code Section 121 authorizes an “exclusion” or escape from income taxes for profits from home sales. The exclusion is as much as $500,000 for married couples who file joint returns and $250,000 for single filers and couples who file separate returns. On profits above the exclusion, the excess is subject to tax as long-term capital gains at a maximum rate of 15-percent, plus applicable state taxes.
The main requirement for this exclusion is that you own and live in the property as your principal residence for a period of at least two out of the five years ending on the sale date, and at least two years must have elapsed since you last used the exclusion.
Is There A Tax Breaks for Personal Property?
The exclusion break does not apply to any furniture or personal property you might sell for a profit. You must count any profit on those items as reportable income in the year of the sale, as well as any loss on their sale cannot be deducted since you did not initially buy them to make a profit or earn income.
If you do decide to sell the contents, the tax can run unexpectedly high. The Internal Revenue Service measures gain or loss separately for each asset sold, not by the overall result of the sale.
For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.