It’s almost that time of year… yes, tax season is almost upon us! If you are selling a house in Fremont, California, you will love these tax tips for selling your home! This article is for informational purposes only!
For specific questions, contact a trusted tax professional, or the IRS!
Not All Profits Are Taxable
You will be able to exclude a high portion of your profits so long as certain conditions are met. Typically, you will be able to exclude $250,000 from your tax return, and up to $500,000 if filing a joint return. (However, if you sell for a loss, you won’t be able to take a deduction for that amount.)
The deduction is only available when selling your primary residence, and can only be used once every two years. To qualify for the deduction, you must have lived in the residence for at least two of the past five years.
It is important that whenever you move, your address is updated with the IRS.
If you do not meet the requirements above, you might still be able to exclude a portion of your profits from your income tax. There are many special conditions you can meet in order to receive a prorated, tax-free gain. If you need to sell because of a change in your health, a job change or other unforeseen circumstances, you will be able to write-off a portion of the profit.
Reporting the Sale
You will need to report the sale if you receive a 1099-S form from the closing agent. This form provides the IRS with information regarding the proceeds from real estate transactions. To avoid reporting, make sure that you are able to exclude all profits. Let the agent know at the time of closing that the form will not need to be issued. Even if you are able to deduct all profits, if the form is issued, you will still need to file it with the IRS… even if no money is owed.
Capital Gains Taxes
If you are selling an investment property or house you have only owned briefly, you will likely be subject to the capital gains tax. Capital Gains taxes are dependent on how much you make. If you have a lower income, you will pay no capital gains taxes. People in higher tax brackets can pay upwards of 20%. Short-term assets are typically taxed the same as ordinary income.
First-Time Homebuyer Credit
Depending on the dates you bought and sold, you might have to pay back all or part of the credit you received. Typically if you move within 36 months of purchasing the home, the credit must be paid back upon the sale of the home. Special rules apply and can be found in Publication 523 from the IRS.
Deduct Selling Costs
When selling your Fremont, California house, you will be able to deduct any reasonable cost when selling your home. This includes the closing costs, improvements made in order to sell the house, assessments, marketing costs, agent fees and so on. Keep track of every cent you spend in an effort to sell your home. Come tax time, this can amount to major deductions!
No matter what time of the year you sell, it is always important to seek the counsel of professionals. Consult your agent, accountant, and attorney to make sure you have set up the best terms for yourself.
Don’t stress too much about taxes when putting your house up for sale in Fremont, California. Odds are Uncle Sam won’t be getting his hands on your profits.
Do you want to sell your house in Fremont, California? We can help! Send us a message or give our office a call today! (925) 852-8261
Here are some interesting facts about Fremont, California
Incorporated in 1956 as a merger of five localities, Fremont is part of the combined metropolitan areas of San Jose, San Francisco and Oakland. Fremont is located in the northern part of the state, about 35 miles southeast of San Francisco.
Beginning as Mission San José in 1797, Fremont was an agricultural community in the 1800s. It grew rapidly during the Gold Rush of the mid 1800’s, and again in the mid 1900s when General Motors built an automobile plant. Its most recent growth occurred in the 1980s and 1990s as it rode the high technology wave.
Precipitation is about 15 inches per year. Temperatures reach 90 degrees about 20 days of the year. July daily highs average in the 80s, while lows average in the 50s. January daily highs average around 60, and lows near 40.
Located within the Silicon Valley, Fremont has a large manufacturing base, much of it associated with electronics. Large employers include the NUMMI auto manufacturing plant, a General Motors/Toyota joint-venture and Lam Research Corporation, a semiconductor processing equipment maker.
Arts and Leisure
Cultural, historical, and other leisure attractions include:
- The Fremont Festival of the Arts.
- The Fremont Symphony Orchestra.
- The Museum of Local History.
- The Niles Essanay Silent Film Museum.
- The Mission San Jose and Museum.
- The Hiking Trails in Mission Peak.
- Professional sports teams in the bay area.
- Many other attractions in the San Francisco metropolitan area.