Selling a home is one of the most important decisions for every homeowner. Whether you decided to purchase a bigger home because there is not enough space in your current house or you want to downsize instead after you became an empty nester, selling a home is always a serious and stressful move. Figuring out the necessary taxes when selling a property and their impact on your finances is one of the most confusing parts of the home-selling process. In order to help you, We Buy Houses Columbus has prepared a brief guide that will explain everything about taxes and their role in the selling process.
Do You Have to Pay Taxes When Selling a Home?
Yes, you will most likely have to pay taxes on the money you receive from selling your home. However, there are also certain exceptions that you should know about.
For example, if you had lived in your home for at least two of the five years before you decided to sell it, then the first $250,000 you receive is tax free. This amount will double if you are married and filing your taxes jointly.
If you have lived in your home for at least two years, and its price is less than $250,000, then your home-selling process is completely tax free, meaning that you do not owe any taxes.
How Can You Find Out the Actual Profit on Selling Your Home?
If you want to find out the actual profit, you will have to do some calculations. First, you need to find out the cost basis of your property, which is the actual price of your home. It includes the price of the property itself plus all the expenses from renovations, improvements, and repairs. For example, if you spent $10,000 to renovate your kitchen and bathrooms, you need to add this amount to the cost basis.
The next thing you need to do is to subtract expenses such as the realtor’s fee, closing costs, and others from the amount you sold your property for. For example, if the price of your home was $300,000, and you spent $25,000 in fees, then the final amount you received is $275,000.
Finally, you will need to subtract the cost basis of your property from the total amount you received from the home sale. If this amount does not exceed $250,000, you do not have to pay any taxes.
You Can Apply for a Reduced Exclusion
Those homeowners who owe taxes can claim part of the tax break, which is known as applying for a reduced exclusion. This option is available if the homeowner faced certain life or family circumstances that forced them to put their home up for sale. These circumstances include:
- Change in place of employment
- Change in health
- Multiple births from the same pregnancy
- Acts of war or terrorism
- Natural or man-made disasters
If you are not sure whether you qualify for a reduced exclusion or not, you can always get a consultation with a tax expert, who will clarify your situation and explain your options.
Sell Your Home Fast to a Home Investor to Avoid Taxes
The good news is that you can avoid paying taxes by selling your property to a Columbus home investor. The mission of home investors is to help homeowners sell their homes fast and with no hassle. They purchase properties as-is without requesting any repairs, fixes, or even cleaning. If you are selling your home in Columbus, OH, or any other surrounding area, and you do not want to deal with taxes, We Buy Houses Columbus is ready to assist you. We offer you a simple way of selling your home without any hidden fees or commissions. Our process is absolutely transparent and straightforward. We will purchase your home in any condition and under any circumstances. Do not hesitate to contact us if you have any questions or want to know more about the process.