Preparing for Tax Season
Spring is here and with that comes our favorite time of year…tax season! Actually, tax season is usually more of a headache than a celebration. But as a homeowner, there are a couple of special deductions you can utilize to help you minimize your income and maximize your tax refund. If you are thinking about selling your home this year, or if you already did last year, keep these tax deductions top of mind in the season to come. I've also included the new tax changes for the 2018 tax year to help you understand how deductions for selling in the current year will be accounted for.
Tax Deductions When Selling Your Home
Home Improvements and Repairs – Making repairs and improvements to a home is an important step in getting a higher value for your home when the time comes to sell. But if you want to take advantage of this tax deduction, timing is everything If you're going to sell your home, make sure you do these repairs and improvements within 90 days of closing. This is one tax deduction that will not change with the new tax structure in the upcoming year.
Selling Costs – As you might already know, there are many costs associated with selling a home. Including but not limited to escrow fees, legal fees, real estate commissions, advertising budgets, marketing costs, the list could go on and on. But there is a silver lining! All these costs are tax deductible This could even include the cost of staging your home. The best part, these deductions are here to stay in 2018.
Moving Expenses – If you've had to sell your home and relocate for employment purposes, then you’re able to deduct your moving expenses in 2017. Unfortunately, this has been removed from the 2018 tax plan, but if you are an active member of the armed forces, you can still take this deduction moving forward.
Mortgage Interest – For the portion of the year that you owned a home in 2017, you are eligible to take a maximum deduction of $1 million on your mortgage interest. However, keep in mind this amount has drastically changed moving into 2018. The amount of deductible mortgage interest allowed for new homeowners and sellers in 2018 is $750,000. Although if you got your mortgage before December 15, 2017, you can continue to deduct the original $1 million.
Property Taxes – Did you pay property takes up until you sold your home in 2017? If so, you can deduct the amount paid while you owned the property. This deduction will still be around in the future, but the new cap is $10,000.
Capital Gains – This is more of an exclusion than a deduction, but it’s still a benefit when selling. If you sold your home last year and made a profit after all of your expenses were paid off, up to $250,000 of capital gains can be excluded as income if you are single, or up to $500,000 if you are married. The only requirement here is that you must’ve lived in your home two of the last five years.
Selling Your Home in Orange County
If you’ve been considering selling your home and want to maximize your return, now still might be the best time to sell. With the continued increase in pricing and the consistent demand for single-family homes, home sellers can truly take advantage of this fully recovered housing market. Find out how much your home is worth before you sell. You can receive a custom evaluation of your home, including to other homes that have recently sold in your neighborhood, through the free home estimation system on my site.
Once you’re ready to sell, the next step you take is the most important step of all. Finding a reliable, professional and trustworthy real estate agent in Orange County will determine the forward success of your home selling experience. With more than 18 years of successful sales in Orange County and an extensive community network, I can help you sell your home at the best price. Contact me to get started.