It’s almost that time of year… yes, tax season is almost upon us! If you are selling a house in Louisville KY, you will love these tax tips for selling your KY home! We are local homebuyers in Louisville and we offer cash for houses in KY in any situation. We buy houses in Louisville Kentucky, but this article is for informational purposes only!
For specific questions, contact a trusted tax professional, or the IRS!
Tax Tips For Selling Your Louisville KY House!
Not All Profits Are Taxable
We buy property in Kentucky every year and we have been known to sell a house in KY every now & then. The good news is that you will be able to exclude a high portion of your profits so long as certain conditions are met. Typically, you will be able to exclude $250,000 from your tax return, and up to $500,000 if filing a joint return. (However, if you sell for a loss, you won’t be able to take a deduction for that amount.)
The deduction is only available when selling your primary residence, and can only be used once every two years. To qualify for the deduction, you must have lived in the residence for at least two of the past five years.
It is important that whenever you move, your address is updated with the IRS.
If you do not meet the requirements above, you might still be able to exclude a portion of your profits from your income tax. There are many special conditions you can meet in order to receive a prorated, tax-free gain. If you need to sell because of a change in your health, a job change or other unforeseen circumstances, you will be able to write-off a portion of the profit.
Reporting the Sale
You will need to report the sale if you receive a 1099-S form from the closing agent. This form provides the IRS with information regarding the proceeds from real estate transactions. To avoid reporting, make sure that you are able to exclude all profits. Let the agent know at the time of closing that the form will not need to be issued. Even if you are able to deduct all profits, if the form is issued, you will still need to file it with the IRS… even if no money is owed.
Capital Gains Taxes
If you are selling an investment property or house you have only owned briefly, you will likely be subject to the capital gains tax. Capital Gains taxes are dependent on how much you make. If you have a lower income, you will pay no capital gains taxes. People in higher tax brackets can pay upwards of 20%. Short-term assets are typically taxed the same as ordinary income.
First-Time Homebuyer Credit
Depending on the dates you bought and sold, you might have to pay back all or part of the credit you received. Typically if you move within 36 months of purchasing the home, the credit must be paid back upon the sale of the home. Special rules apply and can be found in Publication 523 from the IRS.
Deduct Selling Costs
When selling your Louisville KY home, you will be able to deduct any reasonable cost when selling your home. This includes the closing costs, improvements made in order to sell the house, assessments, marketing costs, agent fees and so on. Keep track of every cent you spend in an effort to sell your home. Come tax time, this can amount to major deductions!
No matter what time of the year you sell, it is always important to seek the counsel of professionals. Consult your agent, accountant, and attorney to make sure you have set up the best terms for yourself.
Don’t stress too much about taxes when putting your house up for sale in Louisville KY. Odds are Uncle Sam won’t be getting his hands on your profits.
Sell My House In Louisville KY
We are local Kentucky home buyers and we’re happy to help you find answers to your toughest questions about your Louisville real estate, so please feel free to call us at (502) 200 - 1800 and chat with us anytime. We will make the process simple so you can quickly sell your house in KY and move on. We’ll evaluate your house, make you a fair all-cash offer, and you can decide if selling your house to us is the best fit for you. We’re here for you, just reach out and lets chat.