If you’re selling your home in Boston, you could be eligible for specific tax deductions that end up lowering your bill or increasing your refund. Although you should talk to your tax professional before you file, you should know about these five potential tax deductions you may be able to take.
5 Tax Deductions You May Be Able to Take by Selling Your Home
In 2018, the Tax Cuts and Jobs Act changed some of the rules for homeowners – and if you sell your home this year, you could be eligible for these tax breaks next year:
- Improvements and repairs
- Selling costs
- Property taxes
- Mortgage interest
- Capital gains tax
Here’s a closer look at each – and remember, you should talk to your tax adviser before you claim any of these deductions or exclusions.
Potential Tax Break #1 for Sellers: Improvements and Repairs
If you had to renovate rooms in your home to sweeten the deal for buyers, you may be able to deduct the costs of the upgrades you made. That can even include painting the house, repairing the roof and making minor fixes and updates. The key is when you make the repairs; you generally have to handle them within 90 days of closing to call them “selling costs” and take the deduction.
Potential Tax Break #2 for Sellers: Selling Costs
If you have costs directly tied to the sale of your home – and if you lived in the home for at least two of the five years before the sale – you may be able to deduct them on your taxes. The home must have been your principal residence (not an investment property or a second home). This deduction may even apply to home staging fees, legal and escrow fees, advertising costs, and real estate commissions.
Potential Tax Break #3 for Sellers: Property Taxes
You can deduct the amount you paid in property taxes for the year, up to $10,000. Naturally, you only get to claim the time that you still owned the home and made the payments, so you’ll have to check your statements and ensure that you’re not over-claiming.
Potential Tax Break #4 for Sellers: Mortgage Interest
You can deduct the interest on your mortgage for the part of the year you still owned your home. You can only deduct the interest on up to $750,000 of mortgage debt – but if you got your mortgage before December 15, 2017, you can keep deducting the original amount up to $1 million. This needs to be an itemized deduction (your accountant can give you more information), just like your property taxes are.
Potential Tax Break #5 for Sellers: Capital Gains Tax Exclusions
The profits you earn from selling your home are taxed as income, but you can exclude up to $250,000 of the capital gains from the sale if you’re single and up to $500,000 if you’re married. You must have lived in the home for at least two of the past five years, though.
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If you’re thinking about putting your home on the market, we can help you sell it quickly and at the right price. Using innovative marketing techniques, we can bring in qualified buyers who can’t wait to see the inside of your home – so let’s talk. Call us at 617-966-2475 or 617-262-3075 now, or fill out the form below, to find out how we’ll help you sell your home in Boston.