12 Tax Tips For Selling Your Raleigh NC House!

12 Tax Tips For Selling Your Raleigh NC House!

If you were able to take part in the New Years’ festivities on Fayetteville St in Raleigh, you’re probably just getting acclimated to 2018.  But, April is only a couple of months away… yes, tax season is almost upon us!

If you are selling a house in Raleigh NC, you will love these tax tips for selling your home! This article is for informational purposes only!

For specific questions, contact a trusted tax professional, or the IRS! 

1 – You can only exclude your primary residence

You can only exclude the profit from the sale of your primary residence.  This exclusion will not cover rental properties, or ones that you have ‘flipped”.  You must have lived in you this home for at least two of the last five years.

This law went before the senate recently and was almost increased to five out of the last eight years.  The National Association of Realtors was able to lobby effectively on homeowners’ behalf.

2 – How much profit can you exclude from your taxes?

For a single person, the maximum exclusion is $250,000.  If you are filing a joint return then the maximum is $500,000.  For the bulk of Raleigh NC homeowners, this should be adequate for not having to pay any taxes from the profits of selling your home.

For those living in larger cities like San Francisco, and New York City, you need to consider the potential tax consequences of selling your house.

3 – How often can you use these exclusions?

The limit is once every two years.  So, if you’re moving away for a job change, and think you may only stay with that job for one year, you must consider the potential tax consequences of buying and selling your primary residence in under two years.

4 – Special exceptions for those with disabilities

There are exceptions to some of these rules. One exception applies to persons with a disability, as well as exceptions for some members of the military, peace corps, and government workers.  See Publication 523 on the IRS website for more details.

5 – You Can Deduct Your Mortgage PMI

This is one deduction that many homeowners miss.  If you’ve been paying for private mortgage insurance (PMI) every month you may be able to get some of that money back by claiming the PMI deduction on your federal income tax return.

Do You Qualify for the Deduction?

  • You got your loan in 2007 or later.
  • The mortgage is for your primary residence or second home that’s not a rental property.
  • Your adjusted gross income is no more than $109,000.
12 Tax Tips For Selling Your Raleigh NC House!
Image Credit – India 7 Network

6 – When You Must Report the Sale

You must report the sale on your tax return if you can’t exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. If you report the sale, you should review the Questions and Answers on the Net Investment Income Tax on IRS.gov.

7 – You may not need to report the sale

To avoid reporting, make sure that you are able to exclude all profits.  Let the agent know at the time of closing that the form will not need to be issued. Even if you are able to deduct all profits, if the form is issued, you will still need to file it with the IRS… even if no money is owed.

8 – Only a Main Home Qualifies

If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time. No vacation homes, sorry to disappoint those that own vacation homes in Wilmington!

9- First Time Home Buyer Tax Credit

Depending on when you bought and sold, you might have to pay back all or part of the credit you received. Usually, if you move within 36 months of purchasing the home, the credit must be paid back upon the sale. Special rules apply and can be found in Publication 523 from the IRS.

10 – Home sold at a loss

If you sell your primary home at a loss, you cannot deduct the loss on your return.  This is why it’s important to know the cost of sale ahead of time, before deciding to sell.

11 – You can deduct selling costs

This is good news because, as for those of you who have bought and sold homes before, it costs a substantial amount of money to sell a house.

This includes the closing costs, improvements made in order to sell the house, assessments, marketing costs, agent fees, and so on. Keep track of every cent you spend in an effort to sell your home. Come tax time, this can amount to major deductions!

12 Tax Tips For Selling Your Raleigh NC House
Image Credit – Got Credit on Flickr

12 – Do your own research and consult a tax professional with questions

Sources such as the IRS.gov website, Publication 523, Questions, and Answers on the Net Income Tax, local CPAs, and attorneys are all great resources to seek out professional advice to determine the tax consequences of selling real estate.

Check out this article from the National Association of Realtors: The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals

Related Post: 5 Reasons Why Your House Isn’t Selling in Raleigh NC

Do you want to sell your house in Raleigh NC? Wake County Home Buyers can help! Send us a message or give our office a call today! 919-473-6885

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