Selling your home is a big (sometimes life-changing) event and financial transaction, so why not profit from it as much as you can? When you get that big chunk of money in your hand from selling your house, you can bet the IRS won’t be far behind. There are, however, several tax deductions you can take when you sell your house. So let’s look at the tax deductions and tax advantages for selling your Salt Lake house before year end.
Repairs and Improvements
Most of the time you’ll have to make some repairs and improvements before listing your house. But these aren’t just expenses. They can also be tax advantages for selling your Salt Lake house before year end.
You do need to be aware, though, that the repairs and improvements have to be made within 90 days of the closing date, but that should give you plenty of time. Further, the IRS treats repairs and improvements differently. Repairs, for example, can be deducted in the tax year of the sale of your house. Improvements, however, can be deducted only over the course of several years because this is based on a depreciation schedule.
Deductible home repairs include:
- Roof repairs
- Mold abatement
- Remedying electrical issues
- Replacing trim
- Replacing smoke detectors
Deductible home improvements include:
- Installing new windows
- Installing solar panels
- Improving the basement
- Adding a deck
- Installing central heat and air
- Installing granite counter tops in the kitchen
Being able to deduct mortgage interest is definitely one of the tax advantages for selling your Salt Lake house before year end you should take advantage of. You’ll have to pay the mortgage interest anyway, so you might as well get some of that back in the form of a deduction. But you must keep detailed records where the IRS is concerned.
There is a limit on how much mortgage interest you can deduct, but that doesn’t affect most people – unless, that is, your mortgage interest exceeded a million dollars. Also, according to 2018 changes to tax laws, home sellers are allowed to deduct interest on a limit of only $750,000 in mortgage debt.
Another inescapable expense associated with home ownership, property taxes are also one of the tax advantages for selling your Salt Lake house. But, again, new 2018 tax laws set a limit for the amount of deductible property taxes. The limit is now $10,000 in property taxes, so whatever you pay above that is not deductible. (But if your property taxes exceed that limit, there are some ways to lower property taxes that you should check into.)
Selling Related Costs
Some of the actual selling costs are deductible and so another of the tax advantages for selling your Salt Lake house before year end. Since actually selling your home costs money, you might well let the IRS help you recoup some of those losses. These home-selling costs can include the money you paid a real estate agent or an attorney, various legal fees, title insurance, escrow fees, staging expenses, inspection fees, and advertising costs. If you intend to take these deductions, just be sure to keep accurate and detailed records of all the costs, expense, and fees.
Using these tax advantages for selling your Salt Lake house before year-end can help you realize a lot more profit on the sale – especially if you also take advantage of the exclusion concerning capital gains taxes. This is an area where real estate professional can provide valuable guidance.