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You may be wondering if there are tax deductions when selling a home. The answer is yes. Check out this list to make sure you don’t miss any of them.
1. Price of selling
These deductions are permissible as long as they are directly related to the sale of the home and you lived in the home for at least two of the five years preceding the sale. Another restriction is that the home must be a primary residence rather than an investment property.
2. Renovations and repairs to the home
You can deduct the costs of upgrading a few rooms to make your home more marketable (and thus fetch a higher sale price). Painting the house or repairing the roof or water heater are examples of such tasks.
3. Taxes on property
According to Zimmelman, the maximum deduction is $10,000. So, if you paid your property taxes faithfully up until the point when you sold your home, you can deduct the amount you paid in property taxes last year, up to $10,000.
4. Interest on mortgage
You can deduct mortgage interest for the portion of the year you owned your home, just like you can deduct property taxes.
5. Sellers face a capital gains tax.
The capital gains rule isn't a deduction (it's an exclusion), but you'll appreciate it nonetheless. To recap, capital gains are your profits from selling your home—whatever cash is left over after paying off your expenses and any outstanding mortgage debt.
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