Tax Consequences Of Selling A Home
Selling of your own home would be taxed that you should know. Any real estate property sale transactions are treated for tax purpose. Earlier, the tax system allowed one time home tax exclusion, but now the system has changed and you need to pay tax whenever there is any sale transaction.
But, if you are able to prove that the home that you are selling is your main place of residence, then there are few exclusion but you need to qualify certain demands of the government.
The two basic demands are use and ownership for your main place of residence. If you by chance both used and owned your main place of residence for last five years, then you would qualify for full exclusion of the tax. If either of these two demands meets, then you would still be considered for tax exclusion but the amount will be less.
The total exclusion for a single tax payer is $250,000, and for a married couple the amount is $500,000 filing jointly when both possess the ownership of the property and have stayed in the home for last 5 years. When either of the two demands is met, the exclusion amount would be modified which can be calculated by utilizing the worksheet provided by the IRS.
The next case is where the seller is hoping to sell a property which he had bought for investment purpose. In such a case, the property sale transaction would be taxed heavily so that a chunk of the profit earned by the seller is tasted by the government too. This type of sale transaction would be considered under capital gains. One good thing about capital gains is that it is limited to the 15 percent of maximum rate.
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