Tax Implications for Home Sellers in Jackson, TN: What You Need to Know
As you prepare to sell your home in Jackson, TN, understanding the tax implications involved can help you plan your finances effectively. Here's a look at the main tax considerations for home sellers:
- Capital Gains Tax
If you sell your home for more than what you purchased it for, you may have to pay capital gains tax on the profit. This generally applies to investment properties or second homes.
2. Primary Residence Exclusion
Fortunately, if you're selling your primary residence, you may be able to exclude a portion of the gain from your income. As of my last update in September 2021, the exclusion was up to $250,000 for single filers and $500,000 for married couples filing jointly. This applies if you've lived in the home for at least two of the last five years before selling.
3. Reporting the Sale
Even if you qualify for the exclusion, you may still have to report the sale of your home to the IRS. Make sure to consult with a tax professional to understand your obligations.
4. Deductible Selling Costs
Some costs related to selling your home can be deducted from the profit, reducing your capital gain. These can include agent commissions, advertising costs, and legal fees.
5. Home Improvements and Selling Expenses
If you've made improvements to your home, you may be able to add these costs to your home's tax basis, which can potentially reduce your capital gain. Also, certain selling expenses can be deducted.
Navigating the tax implications of selling a home can be complex. It's always advisable to consult with a tax professional to understand your potential liabilities and deductions.