Do You Have to Pay Capital Gains Tax on the Sale of Your Home?
Hey there, fellow Jacksonville neighbors!
Today in our Jacksonville real estate insights series, we're diving deep into a topic that many homeowners find themselves pondering – the capital gains tax exclusion when selling your home. Understanding this tax rule can potentially save you a substantial amount of money.
Simply put, capital gains tax is a tax on the profit you make from selling an asset that has appreciated in value, such as your home. The "capital gain" is the difference between what you paid for the property and what you sell it for.
Here's where the capital gains tax exclusion comes into play. The IRS allows single filers to exclude up to $250,000 of capital gains from tax, and married couples filing jointly can exclude up to $500,000. To qualify for this exclusion, you must have lived in the home for at least two of the last five years.
To calculate your capital gains, subtract the purchase price and any improvements and selling expenses from the selling price. Here's a simple formula to follow:
For my fellow military service members and veterans, there's an additional perk. You can suspend the five-year test period for ownership and use during any period you or your spouse serve on qualified official extended duty. This can be a significant benefit, so consult with a tax advisor to understand all your options.
As always, it's best to consult with a tax professional to understand the nuances of the capital gains tax exclusion and how it applies to your specific situation.
Understanding the ins and outs of Jacksonville real estate and capital gains tax exclusion can be a game-changer when selling your home. Remember, I'm here to guide you every step of the way.
Feel free to reach out to me at First Coast Heroes Real Estate for any questions or guidance. Let's make your home selling journey a successful and rewarding one!
You’ve got questions and we can’t wait to answer them.