{"id":6887,"date":"2017-12-22T05:55:36","date_gmt":"2017-12-22T10:55:36","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=6887"},"modified":"2026-02-16T18:09:59","modified_gmt":"2026-02-16T18:09:59","slug":"capital-gains-tax","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/capital-gains-tax\/","title":{"rendered":"Capital Gains Tax Home Exclusion Rules Sellers Need to Know"},"content":{"rendered":"

The Tax Cuts and Jobs Act of 2017 offers a lot of changes to many tax payers.\u00a0 Many are debating the pros versus cons of the\u00a0new tax laws.\u00a0\u00a0Although, the main\u00a0goal of the reform appears to be\u00a0to help the American tax payers and further stimulate the economy.\u00a0 One area that had many in the real estate industry as well as homeowners worried deals with capital gains tax and the home sale exclusion.\u00a0 First of all, we are not representing this as tax advice or that we are tax professionals.\u00a0 Rather, we want to\u00a0share types of questions or topics that sellers, Realtors<\/a>, CPA’s, mortgage professionals, and more should discuss.\u00a0 Plus, this discussion should take place before listing the home for sale<\/a>.<\/p>\r\n\r\n

In this article we compare the 2017 versus the 2018 tax law as it relates to capital gains tax on the sale of a home.\u00a0 Additionally, we provide helpful tips on selling and buying homes.<\/p>\r\n

2017 Capital Gains Tax Exclusion on Sale of Home<\/h2>\r\n

Per the IRS topic number 701 – Sale of your home<\/a>, “If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income.\u00a0 You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse.”.\u00a0 Sounds\u00a0pretty good, doesn’t it?\u00a0 So, how do you get this capital gains tax exclusion?\u00a0 To qualify in 2017, the seller of the home must have owned and used the home as the primary home for 2 of the last 5 years of ownership.<\/p>\r\n\r\n\"capital\r\n\r\nPhotograph on Unsplash<\/a>\r\n\r\n

This may only be done once every 2 years and there are other potential exceptions such as for military<\/a>, government housing, or installment sales.\u00a0 It is always important to ask your tax professional to see if you qualify for this exclusion.\u00a0 This has been a very popular way for homeowners or flippers to buy, occupy 2 years, sell for a profit, and not pay income taxes on the profit<\/a>.\u00a0 The profits\u00a0are not even required to be put down on another property to avoid this tax!\u00a0 So, what is the rule on capital gains tax for 2018?\r\n

12 Creative Negotiating Tips to Sell Your Home<\/a><\/h2><\/p>\r\n

2018 Capital Gains Tax Home Exclusion Rules<\/h2>\r\n

Homeowners want to know, “Will I pay a capital gains tax if I sell my home?”. So, these were the old rules.\u00a0 But, there is great news!\u00a0 Although both the Senate and House versions called for increasing the time frame for exclusion of taxation to 5 out of the last 8 years, the final negotiated version kept it at the last 2 of 5 years!\u00a0 This would not have killed real estate but it would have definitely had a negative effect.<\/p>\r\n

Should I Sell My House and Pay the Tax?<\/h2>\r\n

Let’s say, a homeowner does own a home less than 2 years and wants to sell for a profit.\u00a0 First of all, if you are paying a capital gains tax, congratulations!\u00a0 You made a profit on your home after all expenses and hopefully enjoyed the home during this period!\u00a0 Key points are “profit” and “all expenses”.\u00a0 You made a profit and you need to remember to calculate the allowed expenses to lower your tax burden.\u00a0 Items such as Realtor commissions, seller closing costs, seller paid costs for the buyer<\/a>, and certain improvements made to the home could reduce the taxable profit.\u00a0 This is one of those areas where having a relationship with a CPA<\/a> comes in handy.\u00a0 In addition to the CPA, keep receipts for everything to do with the home.\u00a0 It could be a write-off when you do sell the home.<\/p>\r\n\r\n[av_button_big label=’Will New Tax Proposals be the Death of Real Estate?’ description_pos=’below’ link=’manually,http:\/\/teammovemortgage.com\/blog\/2017\/11\/22\/mortgage-interest-deduction\/’ link_target=’_blank’ icon_select=’no’ icon=’ue800′ font=’entypo-fontello’ custom_font=’#ffffff’ color=’theme-color’ custom_bg=’#444444′ color_hover=’theme-color-subtle’ custom_bg_hover=’#444444′][\/av_button_big]\r\n\r\n

Buying a Home After Selling<\/h3>\r\n

If you are considering a sale, then there must be\u00a0reasons and there are plenty!\u00a0 Here are a few examples to sell the current home and most deal with life changes.\r\n