The Tax Implications of Selling a Home in Boise, Idaho
Purchasing a home in Boise can be an investment in many different ways. Not only will a property serve as a place to live, but it can also net the owner a hefty profit when it’s time to sell. To make homeownership even more attractive, the federal government offers several tax incentives to purchasers. By taking advantage of the standard tax break on home sale profits, most sellers won’t even have to report their earnings.
The Favorable Tax Implications of Selling a Home
Federal tax code lets single taxpayers exclude up to $250,000 of a home sale profit. For those filing jointly with a spouse, that exclusion doubles to $500,000. This threshold grants plenty of profit headway to the average seller. Imagine earning an extra paycheck that rakes in thousands of tax-free dollars. That’s what you’ll get if you properly market a home that raises in value.
Qualifying for a Home Sale Tax Exclusion
In order to qualify for this tax break, you must meet a few requirements relating to ownership, use and timing. As long as the home was your primary residence for at least two years, you can apply the profit tax break. Due to this rule, sellers cannot use the exclusion more than once within two years. These requirements are designed to benefit typical homeowners rather than investors who flip houses for a living.
Tax Implications and How to Sell a Home by Owner
Home sale tax incentives can be especially alluring for those looking to sell a property without help from a Realtor. Any sale profit above the $250,000/$500,000 threshold will be subject to capital gains taxes. If you’re planning to make more than the exclusion amount, you’ll have to consider the adjusted basis of your property. The adjusted basis is the original home price, plus capital enhancements, minus depreciation.
If you’re selling on your own, you may decide to put money back into refurbishing your home. Home improvements such as renovated basements, upgraded bathrooms and property additions all fall under the capital enhancement category. Sellers can deduct the cost of major home improvements as long as they were made within 90 days of the sale.
The main draw of selling a home on your own is not having to pay a commission to a professional real estate agent. However, such costs could be negligible when compared to the amount of effort it takes to sell a home and the better deals that most Realtors can garner. It should also be noted that the broker’s commission fee is tax deductible from the overall sale profit. Individuals should remember these factors when thinking about how to sell a home by owner.
Tax Implications and How to Sell a Home as Is
The positive tax implications of selling a home can also be attractive to those looking to market a property as is. Buyers purchase such homes knowing that they may need to make some structural improvements. However, a property for sale cannot have any major health or safety issues. Sellers should remember that all inspection costs or administrative fees they pay can be deducted from the profit.
Individuals considering how to sell a home as is should also keep primary residence requirements in mind when filing their taxes. As long as the seller lived in the home for at least two of the past five years, he or she will be able to take advantage of the sale profit exclusion.
If you find yourself facing foreclosure and unable to find tenants or maybe just inherited a home, in any case, we can help you sell your home in Boise in 7-10 days. If you’re thinking of selling and are exploring your options, consider selling directly to us.
Call our team at (208) 214-3365
If you don’t want to go through the hassle and headache of selling to the market, then we might be able to help. We’ll give you a quick call once we find out a bit more about your property in Idaho, and make you an offer on your home the same day.