To make matters a tad more complicated, those figures changed once again in 2022 to reflect rising inflation, increasing to $12,950 for individuals, $19,400 for heads of household, and $25,900 for married couples filing jointly. This means that for it to work in your favor, all of your itemized deductions need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled when it went into effect. Note that the mortgage interest and property taxes are itemized deductions. 15, 2017, can continue deducting up to the original amount up to $1 million, according to Zimmelman. However, homeowners who got their mortgage before Dec. Just remember that under the 2018 tax code, new homeowners (and home sellers) can deduct the interest on up to only $750,000 of mortgage debt. Mortgage interestĪs with property taxes, you can deduct the interest on your mortgage for the portion of the year you owned your home. So if you were dutifully paying your 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. This deduction is capped at $10,000, Zimmelman says. Enter your address and answer a few questions to get started. Property taxesįind out what selling options are available for your home. “If you needed to make home improvements in order to sell your home, you can deduct those expenses as selling costs as long as they were made within 90 days of the closing,” says Zimmelman. This includes painting the house or repairing the roof or water heater.īut there’s a catch, and it all boils down to timing. Score again! If you renovated a few rooms to make your home more marketable (and so you could fetch a higher sales price), you can deduct those upgrade costs as well. Instead, you subtract them from the sales price of your home, which in turn positively affects your capital gains tax (more on that below). Just remember that you can’t deduct these costs in the same way as, say, mortgage interest. Williams, a tax accountant who operates Your Small Biz Accountant in Kissimmee, FL. This could also include home staging fees, according to Thomas J. “You can deduct any costs associated with selling the home-including legal fees, escrow fees, advertising costs, and real estate agent commissions,” says Joshua Zimmelman, president of Westwood Tax and Consulting in Rockville Center, NY. Another caveat: The home must be a principal residence and not an investment property. These deductions are allowed as long as they are directly tied to the sale of the home, and you lived in the home for at least two of the five years preceding the sale.
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