What Taxes Do I Pay When Selling My House?
Regardless of the size of the property, selling a house is always a serious and challenging process, in which many things need to be taken into consideration. One of the most confusing things for most homeowners is taxes. Many homeowners find it difficult if not impossible to figure out what taxes they have to pay on selling their properties and what impact these taxes have on their finances. If you are one of these homeowners, and you need help with understanding taxes, here is a brief guide with the information you need to have.
After Selling a Home, Are There Any Taxes You Need to Pay?
Yes, in most cases, you have to pay certain taxes on the amount you received after selling your property. However, you should also be aware of certain exceptions that would either reduce your taxes or eliminate them completely.
For example, if you have lived in your home for a minimum of two years, then the first $250,000 you receive from the sale is tax free, meaning that there are no taxes for you to pay. If you are married and file a joint tax return, the tax-free amount would double to $500,000.
You also do not have to pay taxes if your home costs less than $250,000 and you have lived in it for at least two years.
How to Find Out the Exact Profit on the Home You Sold?
There are certain calculations you have to conduct to figure out the exact profit, and some of these calculations might be quite challenging. First of all, you need to figure out the exact price of your home. Certain things need to be taken into account. The first one is the amount you paid when you were purchasing your home. Second, all the additional expenses, including repairs, upgrades, and renovations you spent money on. For example, if a bathroom remodeling project cost you $10,000, you need to add this amount to the actual price of your property.
The next step is to subtract other expenses, including realtor commissions, closing fees, and some other costs from the amount that your property was sold for. For example, if you sold your home for $400,000, and the additional expenses made up $30,000, the final amount you would receive after the sale is $370,000.
The final step is subtracting the cost basis from the amount you sold your home for. If this final amount is less than $250,000, your selling process is tax free, meaning that you do not have to pay any taxes.
An Option for Certain Categories of Homeowners — A Reduced Exclusion
Certain homeowners who do not meet the requirements mentioned above may qualify for a reduced exclusion. They must have certain life circumstances, including a change of job, health issues, divorce, multiple births in a single pregnancy, and some others. If you are not sure whether a reduced exclusion is applicable, you can always consult a tax expert, who will clarify your situation and answer your questions.
Sell Your Home to a Cash Buyer to Save Money
There is one option that can make your home-selling process easier and less expensive — selling your property to a cash home buyer. It is a great option for many reasons. First, it allows you to sell your house fast and close the deal within two weeks. Second, you can save a significant amount of money on closing and realtor fees. Third, you receive cash for your property that you can start spending immediately. Finally, you do not have to worry about upgrades, repairs, or even cleaning — cash home buyers purchase homes as is.
If you are looking for a cash buyer in Jackson or any other nearby town, you should contact We Buy Houses Jackson. We purchase all types of homes regardless of their exact location, age, and condition. If you want to know more about the process, or you have questions you want to ask, feel free to visit our website or give us a call.
