We're off to a roaring start for 2019. January is almost at a close. April 17th (this year's deadline to file your income taxes) will be here before you know it. Are you considering selling your San Antonio home this year? Did you sell one in 2018? You might want to know how a Stone Oak home sale affects your taxes so that you're prepared for what's to come.
Stone Oak Home Sale & Your Taxes
Are There Any Exclusions?
When you sell your Stone Oak home, the profit you receive is called capital gains. As long as you made the home you sold your primary residence for at least two of the last five years, you get to keep up to $250,000 (for single filers) or $500,000 (for married filing jointly) of your capital gains tax-free. You only owe taxes on any profit you make above and beyond that. So, let's say you bought a home back in 2010. After years of enjoying Stone Oak living, you decide to upgrade to a newer home. You sell your property and, after paying off the mortgage company and deducting expenses, you and your spouse receive $650,000 in profit. At that time, you only pay taxes on $150,000.
How Do I Figure Out my Capital Gains?
Basically, you take what you paid for your San Antonio home and subtract how much you sold it for. Then, you subtract any deductible closing costs, points paid, prorated property taxes and HOA fees, title fees, agents' commissions paid, and any costs related to fixing up your home to sell. Whatever is left is considered your profit. Next, subtract your exclusion ($250,0000 or $500,000). Whatever's left is your capital gains. If it's under the exclusion limit, you don't have to pay taxes on it.
What if I Don't Qualify for the Full Exclusion?
Did you live in your house for less than two years before you sold it? Were you forced to sell due to a major job change that forced a move, a natural disaster or an impending divorce? If you had to sell due to a job change or natural disaster, you might be eligible for a partial exclusion. For example, if you lived in your San Antonio home for 18 months, you may be eligible to exclude paying taxes on up to 75% of your capital gains. For the divorced/divorcing couple, you should be able to divide the capital gains as long as you lived in the property for at least two of the previous five years. Then, you would each file the lowered capital gains ($250,000 for single filers) when you file your individual taxes.
Is My Sale Price Too High?
Sometimes, it actually benefits homeowners to lower their sale price if they believe their taxes might end up too high. Yes, that means you won't receive a bigger profit. But it also means you don't owe the IRS more money either. Consult your tax adviser so that they can calculate whether lowering your price is worth the tax break of not first.
LUX Move Up* by Christine Aldrete Banks, CRS, SRS, RSPS