The anxiety of tax season is angst we all live with – year after year. The good news for homeowners that sell their properties is there are many tax deductions to leverage and minimize the amount, if any, you’ll need to pay the IRS.  

According to a Realtor.com article, keep these five deductions, and how to leverage them, in mind when putting your house on the market.

Selling costs. If the home is your principal residence, and you’ve lived in it for two of the five years before you sell, you can deduct costs associated with selling. This includes legal and escrow fees, agent commissions, advertising, and more.

• Home staging also falls under this selling cost deduction. IRS publication 523 speaks to this little-known advantage.

The aforementioned deductions work a bit differently in that you deduct them from the sales price of the home which affects your capital gains.   

Capital gains tax. This is considered an exclusion rather than a deduction. What that means is that you can exclude a portion of capital gains and that amount varies if you’re single or married when you sell.

Improvements and repairs. These investments could get you a higher sales price and also deductions if they were made within 90 days of the closing.

Property taxes.  An itemized deduction from last year could be yours if you are in good standing and current with payments.

Mortgage interest. Just like property taxes, this is an itemized deduction and you can deduct a portion of it. There were some new changes in 2021 related to just how much you can.

As always, consult with your accountant or CPA on any tax deductions you may qualify for as tax codes and laws do change.

-Mar

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