When Selling My House, What Taxes Do I Pay?

When Selling My House, What Taxes Do I Pay?

Selling a home is always a big deal, regardless of the condition and size of your property. There are many confusing aspects that home sellers have to deal with, and one of them is taxes. For most homeowners, it is quite complicated to figure out the taxes involved in selling their homes and how these taxes are going to affect their finances. If you are one of these homeowners, Frank Buys Houses has prepared a guide explaining everything you need to know about taxes when selling your home. 

Are There Any Taxes That I Have to Pay When Selling a Home?

Yes, there are most likely taxes you will need to pay on the amount of money you receive from selling your home. However, there are also certain exceptions that can either reduce or eliminate taxes completely. 

If you have lived in your home for at least two of the last five years, then the first $250,000 that you will receive from selling your home is tax free. If you are filing a joint tax return with your husband or wife, then the tax-free amount will be $500,000. 

If you are selling your home for less than $250,000, and you have lived in this home for at least two years, then there are no taxes to pay. And the home-selling process for you will be absolutely tax free.

How To Calculate the Profit On Your Home Sale?

There are certain calculations you need to make, which can be quite complicated. The first and the main step is to figure out the actual price of your home. You need to take into consideration the exact amount you paid for your home and also add expenses like repairs, improvements, and renovations you had to spend money on. For example, if you spend $10,000 on kitchen and bathroom renovations, you need to add this amount to the cost basis. 

The next thing you need to do is to subtract expenses such as closing fees, realtor fees, and other costs from the amount you sold your property for. For example, if the price of your house was $300,000, and you paid $30,000 in fees, then the total amount you received from the home sale would be $270,000. 

Finally, you need to subtract the cost basis from the actual amount of money you received from selling your home. If the final amount is lower than $250,000, you do not have to pay any taxes. 

You Can Apply For a Reduced Exclusion

Even if you do not meet the above requirements, there is an option for a reduced exclusion that allows you to claim part of the tax break. This option is available to those homeowners who are forced to sell their homes as quickly as possible because of certain life circumstances. These circumstances can include health issues, change in place of employment, multiple births in a single pregnancy, divorce, and some others. If you are not sure whether you are qualified for a reduced exclusion option, you can always consult a tax professional, who will clarify your situation. 

Sell Your Home to Real Estate Investor to Avoid Taxes Completely

There is an effective option that will allow you to avoid paying any taxes — selling your property fast to a real estate investor. Real estate investors or cash buyers purchase homes as is and pay home sellers cash. The motto of these real estate investors is “We buy homes fast regardless of the circumstances.” That means that the condition, location, age, and other factors do not matter for them. They will buy your property anyway. 

If you want to sell your property in Stockton, CA, but do not want to pay taxes, Frank Buys Houses is ready to help. We understand how stressful the process of selling a home can be, and we want to make it as easy and hassle free for you as possible. You do not have to perform any fixes, repairs, or even cleaning. All you need to do is to give us a call and schedule a meeting. If you have any questions, do not hesitate to visit our website or give us a call. The agents of Frank Buys Houses are always here for you.