How Will My Home Sale Affect My Taxes?
If you are trying to sell your home and are unsure of the actual amount of taxes that will be due then read below. There are many rules that have been created which can affect you based upon your income, net capital gains, and marriage status. Your taxes will also be determined by whether or not the home you are selling is your main residence or a vacation home. These all play an important role in computing what you might owe to the government.
There is a capital gains allowance for people that sell their home. It allows a net amount of $250,000 for single persons, and $500,000 for married couples that they are allowed to earn before the captial gains tax takes effect. If the net amount of your capital gains taxes are higher than these amounts you will pay taxes on the difference.
Loss On Sale Of Home
If you do not make a profit or
simply recoup the cost of the loan then you will not owe any taxes. This would constitute no capital gains on the sale of your home. You may be able to write off a deduction on your taxes against your income.
In order to obtain the capital gains tax benefit the home that you sell should be your main residence. In order to qualify you should have lived at this address for at least two years. Otherwise, it would not qualify and you are subject to taxes on the profit received.
Medicare 3.8% Tax
This is a new rule that was created with the Obama administration’s health care bill. Most people will not end up paying this tax. However, if your income whether married or single is more than $200,000 and the capital gain is more than the $250,000 for single persons, and $500,000 for married couples you will be subject to a 3.8 percent medicare tax.Source: www.taxforuminfo.com