One of the largest investments you will make in your lifetime is buying a home. When you sell your house, you can take advantage of tax deductions for homeowners that are available for when you sell your house, in addition your equity that you can cash in. By using these tax deductions for homeowners you will be able to keep even more of your profits. Even though this will take some effort when you sell your house, it will be worth it! It all starts with good record keeping.
You will be able to make the right move at the right time if you take the time to consider your exit strategy when you buy your house. You must pay close attention to the details for each tax deduction since stepping outside of the guidelines may disqualify you from each deduction. Naturally, there are limitations and specific guidelines with each deduction, and you will want to be aware of the most recent tax laws to optimize your tax strategy.
Below are the top four tax deductions for homeowners selling their homes in San Antonio.
Capital Gains Tax
It is likely that your house has increased in value since the time that you bought it, or, put another way, it has increased from its basis. When you sell your principal home in San Antonio, capital gains tax deductions for homeowners come into play depending on how long you have owned your property. If you happened to profit from the sale of your property, this is called unearned income and is taxed at a rate that differs from earned income. But if you have sold your principal residence in the past two yours, individuals can exclude up to $250,000, and married couples that file jointly can exclude up to $500,000 in capital appreciation. For your purchase and exit strategies, proposed tax laws require flexibility when you purchase your property. If the proposed American Families Plan pass, investors capital gains rate may increase if they make over $1 million.
Tax deductions for homeowners can also be found for the expenses incurred when selling their home in San Antonio, assuming that there have been no physical changes to the property itself. Such expenses include legal fees, realtor commissions, advertising and any other fees that are directly associated with the sale of your property. These expenses can be used to offset your profits and reduce your capital gains tax. Improvements to the property, significant repairs or staging expenses may also be deductible. While the closing costs such as legal fees for the title search, title insurance, or recording fees are not deductible, you can reduce your capital gains by lowering the profit when you add these expenses to the cost basis of your home.
Married couples filing jointly are limited to a total deduction of $10,000, for property, state or local income taxes or sales taxes. In order to claim the taxes, they must have already be paid and must be paid in the year you are filing for you to claim them. If your taxes are escrowed, check with your mortgage company to make sure that they made the payment to the county. If you own a vacation home, land or a property located in another country, you may also be able to write off taxes for these properties as well. Other tax deductions deductions for homeowners can be made for other possessions such as the interest for are your car, RV, or boat. Be sure you understand clearly the tax laws regarding which assessments and which payments you may deduct from your taxes.
Tax deductions for homeowners can be realized when deducting the mortgage interest. The mortgage interest can be deducted for only the months that you owned the house, just like with the other property tax deductions for homeowners selling their homes in San Antonio. In the Tax Cuts and Jobs Act (TCJA) of 2017, the mortgage principal maximum amount changed to $750,000 for new loans. For married couples who are filing jointly in 2021, the TCJA is now $25,100 which is double what it was previously. Therefore, only the qualifying mortgage interest above this amount is deductible. Private mortgage insurance, PMI, is tax-deductible currently as well. If any energy-saving home improvements have been done to the property, any interest paid for financing on these loans might also be deductible as home mortgage interest.
Talk to Big Buck Home Buyers about these and other tax deductions homeowners should be aware of when selling your San Antonio home. The professionals at Big Buck Home Buyers want to help you get the best profit possible. With years of experience, we can help guide you. And if you’re buying another home, Big Buck Home Buyers has an inventory of the best properties. Call Big Buck Home Buyers at (210) 920-5280 or send us a message to see how we can help you. ~