5 Last-Minute Tax Tips for Home Sellers
With just two weeks left until April 15 (that’s the deadline to file your 2012 taxes*), it’s crunch time for all of us taxpayers out there. If you’ve sold a home in the past year, or if you’re planning to sell a home in 2013, these tax tips will help you understand what tax benefits you’re eligible for and which ones to be aware of when you’re filing.
1. If you make money from sale of your primary residence (the one you live in most of the time), you may qualify to exclude up to $250,000 of that gain from your income. And if you file a joint return with your spouse, you may exclude up to $500,000 of that gain. You can’t deduct a loss from the sale of your home.
2. You’re eligible for that exclusion if you’ve owned and used your home as your main home for a period amounting to least two years out of the five years prior to its sale.
3. For complete eligibility requirements, limitations on the exclusion amount and exceptions to the two-year rule, visit IRS.gov and search for Publication 523 PDF. This document will help you figure the net cost of the home you sold, the gain/loss on the sale and any gain that’s eligible for exclusion from your income.
4. If you received the first-time homebuyer credit and put it towards buying the home that you sold or will be selling, you’re required to repay the credit if you’re no longer using that as your principal residence (and it’s within three years of the date purchase). Repayment of the credit will be due with your tax return for the year the home stopped being your principle residence, using Form 5405 from IRS.gov.
5. When you move, don’t forget to update your address with the IRS and the U.S. Postal Service to ensure you receive any refunds or tax-related mail. Use Form 8822 from IRS.gov to notify the IRS, and to notify the USPS, just go online and fill out a Change of Address Form.
*Note: If you can’t file your taxes by the April 15 deadline, you still have time to file an extension, which will give you until October 15, 2013.
Want more tips on making filing less taxing? The IRS put together a list of the top 10 tax tips.
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