If you’re thinking of selling your Portland, Oregon home, it’s important to be aware of the tax rules. Not knowing can be detrimental, and you could end up having to come up with a lot more money out of pocket than you thought.
At Better Off House Buyers, we’re all about saving you money on the sale of your home. We have a few tax tips to share with you that might make the process a lot easier.
Tax Tip #1: You May be Exempt From Federal Taxes
Have you owned and lived in your home for two of the last five years prior to the sale? If so, then as much as $250,000 in profit may be exempt from taxes. If you’re married, that number doubles to $500,000. This is called a capital gains tax break.
In order to qualify for this exemption, you must have not excluded the gain on another home within the last two years. A tax professional is the best person to ask about this. They can advise you on your personal tax situation.
The $250K or $500K should be excluded from your taxable income. You may not even need to support the sale at all unless you receive a Form 1099-S in the mail. If you sell your home at a loss, you won’t be able to deduct it.
Of course, there are exceptions to every rule, and the same is true in this case. You may qualify for this exclusion of you received the house as a result of a divorce settlement.
Tax Tip #2: You May Fall Under Special Tax Circumstances
If you’re a homeowner, your situation is probably one of the following:
· You bought your house from someone else.
· You built your home yourself.
· You inherited your home from someone else.
You’ll need to determine the actual cost of your home before you can calculate your taxes. So if you bought the home yourself, the price you paid is the purchase price. This includes any closing costs, your down payment, and any debt that you took on. If you built your home or you contracted someone to have it built, the amount you paid, including your closing costs is the cost of your home.
But in the case of an inherited home, the rules are a little different. The cost of the home is what the fair market value of it was at the time of the previous owner’s death.
This information is important for you to have. You will need to report it on your next tax return.
Tax Tip #3: You May Qualify for a Reduced Exclusion
If you don’t qualify for the capital gains exclusion, you may find that you do qualify for a reduced exclusion. But this only applies if the living conditions of a qualified individual change. The term, qualified individual, may apply to yourself, your spouse, anyone who co-owns the house with you or a resident of the home.
You may qualify for a reduced exclusion if any of the following applies to you:
· You moved because you got a new job AND the new job is at least 50 miles farther from your old home than your previous job was. You must have changed your employment situation while you were still living in the house you’re trying to sell.
· You have a qualified family member in your house who has some type of illness, disease or injury. You must sell your property because they need treatment or because a doctor recommended a change in residence.
· You’ve experienced circumstances that are out of the ordinary, but still life-altering. Some examples would be a divorce, the death of a family member, or employment changes.
Tax Tip #4: Always Keep Your Tax and Real Estate Documents Accessible
You’ll want to make sure you always have the documentation on your house handy, just in case you need them. You should include your closing statement as well. Many agents automatically mail their clients their closing statements after the sale of the house has gone through.
Tax Tip #5: Choose to Work With an Investor for the Sale of Your House
There’s a lot more to paperwork to keep track of when you sell your home through an agent. It can be hard to manage all of it, and a lot of people end up having to ask for copies, which can be difficult to obtain.
The best way to sell your house is to do so through an investor or a professional home buyer. At Better Off House Buyers, we simplify the selling process for you. Yes, you will still have a closing sheet, and you may need to pay taxes on the home. But every situation is different, and we can guide you in everything you need to do.
You’ll love how quick and easy our buying process is. In fact, you can have cash in hand for your house in as little as seven days in many cases.
Choose Better Off Home Buyers in Portland, OR
Now is a great time to sell your house, but perhaps you’ve been putting it off for a while. It can be a lot of work to sell a house, but when you work with Better Off Home Buyers, you’ll find it to be much easier than you thought.
Our process involves several steps, but it all happens very quickly. Once you contact us about your home, we’ll make an appointment to see it. We always use proper safety practices, including wearing masks and gloves, if necessary. We’ll come and see the house for ourselves and then you’ll receive a written offer if it meets our qualifications.
Once you have your offer and you accept it, just let us know when you want to close. It really is that simple.
Do you have tax-related questions about the sale of your home? Please contact us today.