What is tax deductible when selling a home?

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As a homeowner, you are entitled make deductions such as property taxes and mortgage interest during your time of ownership. When it's time to sell your home, other deductions may apply.

Capital Gains

For single sellers, up to $250,000 in gains are tax-free if you have owned and lived in your home for at least two years out of the past five. For married couples, the amount increases to $500,000.

Closing costs

Fees paid for the original purchase of the home, but not for mortgage costs, can be deducted. Examples include recording fees and title insurance.

Special Tax Assessments

One-time taxes paid for improvements such as sidewalks or streets may be deducted.

Additions and Improvements

Permanent improvements, not repairs, may be added to your home's original sales price. Examples include a new roof, a bathroom addition, central air conditioning or attic insulation.

Selling Expenses

Commission costs, advertising, legal fees and seller-paid loan charges can all be deducted from the taxable gains on the sale of your home.

Depreciation

Depreciation may reduce your taxes due if you used your home for a business or rental income.

Source:

IRS 523: Selling Your Home

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