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Maximize Your Profits: 5 Sweet Tax Deductions for Home Sellers

Maximize Your Profits: 5 Sweet Tax Deductions for Home Sellers

Selling your home can be a daunting task, but it can also be a lucrative one if you take advantage of all the tax deductions available to you. The good news is that you can still claim these deductions even if you sold your home in 2022, despite the changes made to the tax code back in 2018 by the Tax Cuts and Jobs Act. In this blog post, we'll break down the top five tax deductions you should be aware of when selling your home.

  1. Selling costs You can deduct any costs associated with selling your home, including legal fees, escrow fees, advertising costs, and real estate agent commissions. This deduction is only allowed if the costs are directly tied to the sale of your primary residence, and you lived in the home for at least two of the five years preceding the sale.

  2. Home improvements and repairs If you made any upgrades to your home before putting it on the market, you may be able to deduct those expenses as selling costs as long as they were made within 90 days of the closing. This includes anything from a fresh coat of paint to repairing the roof or water heater.

  3. Property taxes If you were paying property taxes up to the point when you sold your home, you can deduct the amount you paid in property taxes last year up to $10,000.

  4. Mortgage interest You can deduct the interest on your mortgage for the portion of the year you owned your home. However, under the 2018 tax code, new homeowners (and home sellers) can only deduct the interest on up to $750,000 of mortgage debt. Homeowners who got their mortgage before Dec. 15, 2017, can continue deducting up to the original amount up to $1 million.

  5. Capital gains tax for sellers Although not technically a deduction, the capital gains rule can still save you a lot of money. You can exclude up to $250,000 of the capital gains from the sale if you're single, and $500,000 if married, as long as you've lived in your home for at least two of the past five years. The capital gains are calculated on the cost basis of your home, not the original purchase price. Keep track of every home improvement receipt to ensure that your cost basis is as high as possible.

Now that you know about all the tax deductions available to you when selling your home, it's time to put that knowledge to work. And who better to help you navigate the complicated world of real estate than the Robb Luxury Home Group? Their team of experienced professionals can guide you through the process, ensuring that you get every dollar you deserve from the sale of your home. So don't hesitate to contact them today and start maximizing your net profits.

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Robert is your go-to Real Estate Broker Associate at SERHANT., where we redefine Global Luxury. From expansive golf course estates to exclusive waterfront havens and everything in between, Robert merges cutting-edge marketing strategies with a classic, high-touch service approach, ensuring every transaction is handled with unparalleled discretion and integrity.

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