Last week we talked about buying houses so this week we will talk about selling houses. The law changed about ten (10) years ago and you no longer roll the profit form previous homes.

Again, a few rules to follow to exclude $250,000 of gain as a single person and $500,000 married filing jointly.

1. During the five (5) year period ending on the date of sale, you must have owned the home for at least two years.

2. During that same five year period, you must have lived in the home as your main residence for at least two (2) years.

3. If you must sell your home for any unforeseen reason, health issues or you are transferred out of the area; you will still be entitled to a partial credit.

To determine the amount of your gain, start with the total purchase price of you home including closing costs and add any major improvements that you made to your home – not cosmetic, like new paint and carpet but improvements, new concrete, upgrading the furnace or roof, room additions, etc. – and subtract from the net selling price of the house. The net selling price is the price less any closing costs you have to pay.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.