Home buying and home selling may come with a lot of expenses which is why it's better if you are aware of what benefits you can claim come tax time. As the New Year comes near and you're taking care of your taxes, here are some things that you wanna think about:
Capital Gains
If you gained money from your home sale through a capital gain, this amount may actually be excluded from your tax filing. If you have lived in the property that you sold for at least two years of the five years before you sold the house, you do not need to report this on your tax filing, hence a significant financial win.
Gain Reports
If you have not met the previously mentioned condition (living in the home for 2/5 years), you're gonna have to report that sale and capital gain during tax filing. This is important whether you want to claim the amount or not. If this is your case, it's better if you make yourself aware of the 'Net Investment Income Tax' before you start filing your tax so you can assure the accuracy of your claim.
2 Year Claim
While it's beneficial to not report your gain as much as possible, it's important to remember that you can only exclude gains you received from a sale every two years. So if you have moved multiple times in the previous years, you're gonna have to report any amount that you have gained from these sales.
Selling At A Loss
It is certainly more ideal if you earned money from your home, but if you gained less than what you paid for for the property, you may not be able to claim this. As disheartening as this may be, you really cannot deduct this amount off your tax return.
Buying or selling a home has benefits beyond the actual transactions, and there are ways to make your tax filing pleasant if you are aware of all possible tax benefits. If you want to pursue real estate business in the future, contact your agent for specific details and assistance.
