Do you always find yourself scrambling at the last minute to file your taxes? You only have 17 days until this year’s April 18th filing deadline. But do not worry. This year, you might feel fortunate to have procrastinated. Why? Well, if you sold a Westfield area home last year, you still have time to claim these home seller tax deductions.
Home Seller Tax Deductions
Costs Associated With the Actual Home Sale
Staging fees, escrow fees, agent commissions, etc. You paid somebody to spruce up your curb appeal. Maybe you performed a home inspection before you listed to avoid any unpleasant surprises during escrow. Any money you spent on these and anything else associated with the actual sale of your Westfield area home may be tax-deductible.
Perhaps your property needed some updating to compete with other properties on the market. Maybe you needed to add a fresh coat of paint to appeal to a wider market. You finally oiled those squeaky hinges and repaired the holes in the wall before you listed your home for sale. As long as these were done within 90 days of your closing date (not your listing date), you can claim these expenses on your taxes.
You always pay your property taxes on time. In fact, many times, you paid them well in advance. Fortunately for you, you may deduct up to $10,000 of the property taxes paid during the year you sold your home.
Interest On Your Mortgage
Another one of the tax deductions home sellers get to claim is their mortgage interest. The mortgage interest you paid for the year up until the time you sold your home can be deducted from your taxes. There are limits to the amount of interest you can deduct, though. Your tax preparer will be to tell you what they are before you file.
Capital Gains Exemption
Finally, let’s talk about capital gains. The difference between what you paid for a property and what you sold it for is called capital gains (provided you sell it for more than you paid for it). The IRS considers this income. Therefore, they apply a tax to it. However, the first $250,000 of capital gains for individuals and $500,000 for married couples are exempt from the capital gains tax. So, if you and your spouse bought your Westfield home for $250,000 and sold it for $550,000, you do not owe any capital gains. If you were the sole owner under the same scenario, you only pay capital gains on $50,000. The first $250,000 is exempt. Also, keep in mind that many of your selling expenses chip away at your capital gains. In turn, this lowers the amount subject to a capital gains tax.
I do not profess to be an expert on taxes in any way. Always talk to your tax preparer about any possible tax deductions before you file. The IRS also provides a guide on tax deductions for selling your home if you need any further help.