When it comes to selling your primary residence, there are important tax implications to consider. In general, if you sell your primary residence and make a profit, you may be subject to capital gains tax on that profit. However, there are certain exemptions and special circumstances that can affect your tax liability.
One of the most important exemptions is the primary residence exemption. This exemption allows you to exclude up to $250,000 in capital gains from the sale of your primary residence if you're a single taxpayer, or up to $500,000 if you're married filing jointly. To qualify for this exemption, you'll need to have owned and used the home as your primary residence for at least two of the five years prior to the sale.
It's also important to note that there are certain exclusions and adjustments that can affect your capital gains calculation. For example, if you've made significant improvements to your home, you may be able to adjust your basis (the original cost of the home plus any qualifying improvements) to reduce your capital gains liability.
Overall, navigating the rules surrounding capital gains on the sale of a primary residence can be complex, but with the right guidance and knowledge, you can make informed decisions and minimize your tax liability. Be sure to consult with a qualified tax professional to fully understand your options and obligations.
I hope this information is helpful as you consider selling your primary residence! Let me know if you have any additional questions or if there's anything else I can assist you with.
As always I am not a Accountant so please speak to you CPA
Michael Peppino Keller Williams Signature Properties 617-875-4352