🏠Understand the tax implications of selling your home
💰Avoid paying taxes on up to $500,000 by qualifying for the Section 121 exclusion
🧮Calculate the gain or loss by considering the selling price and expenses
📝Learn about the ownership and use tests to qualify for the exclusion
📈Know the tax rates for short-term and long-term capital gains
What taxes do I have to pay when selling my home?
—The tax you pay depends on several factors, including the gain or loss on your home, whether you qualify for the exclusion, and your taxable income.
How can I avoid paying taxes on the sale of my home?
—You can avoid paying taxes by qualifying for the Section 121 exclusion, which allows you to exclude up to $250,000 (or $500,000 if married filing jointly) of the gain from the sale of your primary residence.
What if my gain is higher than the exclusion amount?
—If your gain is higher than the exclusion amount, you'll have to pay taxes on the amount over and above the exclusion. The tax rate will depend on whether it's considered short-term or long-term capital gains.
Can I use the exclusion multiple times?
—Yes, you can use the exclusion multiple times, as long as you meet the ownership and use tests. However, you can't use the exclusion if you excluded the gain from the sale of another home within the two-year period prior to the sale.
How do I calculate the gain or loss on my home?
—The gain or loss is calculated by subtracting the selling price and expenses from your adjusted basis. Your adjusted basis includes the purchase price, closing costs, and improvements.
00:00If you're thinking about selling your home, learn about the tax implications and how to avoid paying taxes on up to $500,000.
10:37Calculate the gain or loss on your home by considering the selling price and expenses like commissions and legal fees.
19:59Qualify for the Section 121 exclusion by meeting the ownership and use tests. The exclusion allows you to exclude up to $250,000 (or $500,000 if married filing jointly) of the gain from the sale of your primary residence.
31:50Understand the tax rates for short-term and long-term capital gains, which depend on your taxable income and filing status.
42:25You can use the exclusion multiple times as long as you meet the ownership and use tests, but be mindful of the two-year rule.
