By Jocelyn P. Porteria
Tax time is over for most of us and probably enjoyed the refund if you had some. Some may have saved the money for a down payment of a new home. Spring season is always the time of the year when house hunters go out and flock at open houses and showings. I just listed five homes in February and not even a week, I got multiple offers. I was working with at least five buyers also and had a hard time winning the contract because it became a bidding game. Well, you just have to know how to win it and it all comes down to negotiations. This is good news!!!
I came across with this nice article about ten tax tips provided by the IRS for individuals selling their home. CAUTION: Not for short sales but regular sales, the seller has more equity or value of the home from the mortgage principal balance. IRS offers this important information to people who sold their homes or about to sell their home. If you have gain from the sale of the primary residence, you may qualify to exclude all or part of that gain from your income.
In general, you are qualified to exclude the gain if it is a primary residence for two years out of the five years prior to the date of its sale. You may exclude up to $250,000 or $500,000 in most cases. However, you are not eligible if you excluded the gain from a sale of another home during the two year period prior to the sale of your home. If you can exclude all of the gain, you do not need to report the sale on your tax return. If you have a gain that is not excluded, it is taxable and you must report on Form 1040, Schedule D, Capital Gains and Losses.
You cannot deduct a loss from the sale of your main home. Worksheets are included in Publication 523 “Selling Your Home” to help you figure the adjusted basis of the home you sold, the gain or loss and the gain that can exclude. If you have more than one home, you can only exclude from your main home even if you consider it both primary residence.
If you received first-time homebuyer credit and within 36 months from the date of purchase, it is no longer used as principal residence and you are required to repay the credit. Full repayment is due with the income tax return the year it is no longer your primary residence. Be sure to update your address with IRS when you move to receive your refund. For more information about selling your home, see IRS Publication 523 Selling Your Home. It is available at irs.gov or call 1 800 TAX-FORM (800-829-3676) or consult your professional tax preparer for more detailed information.
Many of you probably received an email from the IRS before tax time regarding something that you have done wrong or some sort of a fraud and you panicked. Who wants to receive anything from IRS except a hefty refund? Well, it was a phishing scam just like others who claims your transfer to the bank did not go through or you purchase a plane ticket and you know you did not even engage into such things. IRS does not send taxpayers any unsolicited emails about their tax accounts, tax situations or personal tax issues. These are some forms of identity theft that try to trick you to reveal personal information that can be used to access your financial accounts. It may contain a link that when you click, it download a virus that infects your computer or direct you to a fictitious form or site posing as a genuine IRS form or website. When in doubt, call the IRS and ask about the email.
HAPPY EASTER EVERYONE AND ENJOY THE SPRING!!!
Note: Jocelyn Porteria is a Realtor® licensed in VA. She earned a designation of ABR, GRN Accredited Buyer’s Specialist and GREEN Designation, CDPE Certified Distressed Property and Short Sale Expert, (SFR) Short Sales and Foreclosure Resource. For more info, call her at 571-432-8335 or email at email@example.com for a free confidential evaluation of your individual situation, property value, and possible options. She is also an accredited agent of Ayala Land, SM Residences and Century Properties in the Philippines.