Great Advice From A Great Source
IRS has an amazing Tax Tip email service. Real estate people should study them and use them as handouts to your clients. This is information from the source. I would register for their tax tip email and then google IRS TAX TIPS ARCHIVES to check what has been sent out in previous years.
This is good information in today’s market, because many homeowners are selling their homes at a gain. Will they owe tax? Agents and MLO’s read this, absorb this and send it out to your homeowners or future homeowners or past homeowners. Anyone is a future prospect. Here are some facts from Tax Tip 2021-83, June 10, 2021:
1. To receive the full $250K (single) or $500K (joint) exclusions the homeowner must have owned the home and lived it as their main home for at least two years out of the last five. This means you can qualify in two years or live in it for two years and then rent it out.
2. If you should experience a loss when you sell it, the loss is not deductible.
3. You can only exclude the gain on your main home.
4. To calculate gain you can add the cost of improvements during ownership to your purchase basis.
5. If you exclude all your gain, you do not have to report the sale.
6. There are possible exceptions for some individuals (disabilities, some military, Peace Corp. and others)
To learn more about selling a home read, IRS Publication 523, Selling Your Home, click HERE.
To subscribe to IRS Tax Tips click HERE.