Selling your home is the start to another chapter in your life and should be an exciting time. Whether you’re moving out of your starter home to raise a family, downsizing because you’re embarking on retirement, or any reason in between, selling your home allows you certain deductions come tax time!

Some Capital Gain is Tax Free

Capital gain is the profit you receive from the sale of your home. If the home was your primary residence for at least two of the previous five years, you are able to keep, tax free, a profit of up to $250,000 if filing as a single tax payer, and up to $500,000 if married filing jointly.

Moving and Starting a New Job

If you are selling your home for work-related purposes and you are moving at least 50 miles closer to your new job, your moving expenses could be deductible. Expenses include:
•    Miles you drive related to moving
•    Travel expenses
•    Moving company expenses
•    Moving supplies
Be sure to keep all of your receipts and document the beginning and ending mileage.

Capital Home Improvements

A capital home improvement is an improvement that adds value to your home and has a useful life of more than one year. Examples include:
•    Home additions
•    Insulation in attic, walls, floors, pipes and duct work
•    Plumbing improvements
•    Heating and air conditioning
•    Some landscaping
•    Interior improvements including built-in appliances, kitchen updates, and flooring
•    New roof
•    Wiring upgrades
•    For a full list of capital home improvements, click here, page 9.

Selling Expenses

Some costs of selling your home can be deducted from the profit you realize when you home is sold. Essentially it will reduce the amount of your taxable gain. Selling expenses can include:
•    Marketing of the home for sale
•    Realtor commissions
•    Appraisal, closing, attorney and settlement fees
•    Escrow fees
•    Fees incurred for preparation of documents
•    Other selling expenses that do not physically affect the property
 
Note: The costs that go into the sale of your home could differ by state. For example, here in Central Florida, there is a deed tax on selling a home especially if you have not sold a home before. This is a tax imposed by the state of Florida, every time a piece of real estate transfers ownership. Florida imposes a documentary stamp tax on transfers of real estate by deed at a rate of $.70 per $100 or part thereof of consideration. In Florida, this closing cost becomes the seller’s responsibility by default.
 
So for example if you sell your home for $250,000, you would owe the State of Florida $1750.00 ($.70 x 2500). Here are more costs associated with selling your home in Central Florida.