Selling a home is an exciting yet daunting venture. You’re either looking for a bigger house or a smaller place to live. Should it be traditional or modern? Acreage or no land? You have a lot to consider, and some parts of the process may be quite confusing. One of the most complicated pieces of the home-selling process is taxes and how they may affect your finances. In order to understand real estate taxes better, KM Home Buyers has prepared a brief guide with all you need to know about paying taxes when selling a property, especially if you want to sell your house fast.
Do You Need to Pay Any Taxes?
Yes, in some cases, you will have to pay taxes when you are selling your property. However, there are also exceptions that can you help you avoid paying taxes entirely or pay only a small amount.
If you have lived in your current residence for a minimum of two years, then the first $250,000 that you make on selling your home is tax-free, meaning that you do not need to pay any taxes at all. This amount can even double if you and your spouse file a joint tax return. So, for example, if you happen to sell a property in a competitive area, you can get the tax exclusion on up to $250,000 of your sale profit if you are single and $500,000 if you are married.
How to Know the Profit You Can Make on the Home Sale
To estimate your potential profit and whether you’ll need to pay taxes or not, there are some calculations that you need to do. The first step is figuring out how much your house is actually worth. You can find comparable homes that have sold in the area to help you with this.
You’ll then calculate how much you have spent on renovations, repairs, and improvements on your property. The third step is estimating the fees you’ll have to pay when your house sells – the realtor’s fee, closing costs, and other expenses.
Once you know the home’s worth and the costs you’ve incurred/will incur, you can calculate the amount you can sell the house for and know whether that amount keeps you under the $250,000 profit mark or not.
Apply for a Reduced Exclusion
If you owe taxes, there is still a possibility for you to claim part of a tax break. The reduced exclusion option is available if there are certain life circumstances that necessitated the sale and forced you as a homeowner to sell your house fast. They include the change in place of employment, health issues, divorce, multiple births from a single pregnancy, or any other unforeseen situations. If you are not sure whether you are qualified for a reduced exclusion, talk to a professional with tax experience to clarify the next best steps in your situation.
Selling Your Home to a Real Estate Investment Company to Avoid Paying Taxes
One of the best and most efficient ways to avoid taxes is to sell your house to a cash buyer. The motto of cash buyers is “We buy houses fast.” They will buy your home in any condition, any location, and as-is, meaning that you will not have to make any repairs. If you want to sell your house fast in the Tampa Bay Area, KM Home Buyers is ready to assist you. We buy houses fast in Pinellas, Hillsborough, Pasco, Polk, and Hernando Counties, and we’ll pay you cash. Our mission is to make the home-sale process as easy, fast, and straightforward as possible. If you have any questions, do not hesitate to contact us online and get more information about how we buy houses and what options we can offer you.