Whether you’re expanding or downsizing and plan to sell your home this year, you may be able to avoid paying taxes on some of the proceeds. Determining credits and deductions can be tricky, so be sure to consult a tax professional to maximize on your investment. Get the 411 on your 1040 form irs.gov, and the tips below.
Cashing in on the sale of a home can cost you at tax time, however, proceeds up to $250,000 in sales gain ($500,000 for married, filing jointly) is tax-free as long as you owned the property for two years and lived in it for two of the five years before the sale. For all those home improvement expenses over the years, you can include those costs in the cost basis when determining your capital gains or losses on the sale. However, if you have more than one home, you can only exclude a gain only from the sale of your main home.