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STRATEGIC TAX LAWYERS:  TAX BLOG

Home Sales and Tax Facts

Friday, September 11, 2015
We are the Strategic Tax Lawyers, a tax law firm based in Los Angeles.  Our Los Angeles Tax Attorneys and Los Angeles Tax Relief Lawyers are experts in the IRS Tax Leniency program.  We want to share some important information about home sales and the legal aspect of tax responsibility relating to home sales. In general, gains from sales are taxable. We are here to let you know that if you sell your home then there is a chance that you will not need to pay taxes.  Below are a few tips on what you will need to consider if you are selling your home this year.

If you sell your home, you may be able to exclude either the total or a portion of the gain from the home’s sale. However, you need to meet the eligibility test and requirements in order for this rule to apply. The requirements will involve your ownership and how you use the property.  For example, you need to own the property and used it as a primary residence for a minimum of two out of the five years before you sell it.

As with any requirement, there are different exceptions that may apply.  These can include an exception to the use of the home or the ownership of the home. There are exceptions for persons with a disability and for certain military members and government workers.  

In addition, there is an exclusion limit that may apply, but the most gain you can exclude from tax is a maximum of $250,000 for an individual return and a maximum of $500,000 for joint returns. If the sale of your home results in a gain that is not taxable, then you may not need to report the information about the sale on your tax return.  However, you will need to report the sale of the home to the IRS on your federal tax return if the gain cannot be excluded. You must report the sale if you choose not to claim the exclusion.  If the IRS sends you a 1099-S Form, then you will also need to report the sale or real estate transactions. More information on this is available on the IRS website. According to the IRS, you can also exclude the gain from main home’s sale only one time every two years.  Also, if you own more than one property, you will only be able to exclude the gain on the sale of the primary property that you reside in for the largest percentage of time.

There are special rules that will apply to you if you were a first-time homebuyer and claimed the first-time homebuyer credit.  Also, if you sell your primary residential property at a loss, then you won’t be able to deduct the loss on your tax return.

The Strategic Tax Lawyers, LLP are Los Angeles Tax Attorneys and Los Angeles Tax Relief Lawyers, with years of experience in tax-related and IRS issues.  For a free consultation to assist you with your tax-related issues contact the Strategic Tax Lawyers at (800) 669-4775.