Tax Breaks Remain for Houston Home Sellers

Houston home sellers


Houston home values have been on the rise, enabling more homeowners to sell for a tidy profit. If you’re thinking of selling this year, there’s more good news – the recent passage of the Tax Cuts and Jobs Act preserves the capital gains tax exclusion on the sale of your home!

To qualify for the tax exclusion, you must have owned the home for at least 5 years, and occupied it as your primary residence for at least 2 of those years. The 2 years of occupancy do not have to be consecutive.

There are dollar limits to the home sale profit that can be excluded:

  • Single taxpayers can exclude up to $250,000 in home sale profit.
  • Married taxpayers filing jointly can exclude up to $500,000 in home sale profit.

If your home sale profits exceed these amounts, you would be taxed on the difference. For example, a single filer with a home sale profit of $260,000 would be taxed on $10,000 of it.

To determine the gain, or profit, from the sale of your home, you first need to identify your cost basis. This means adding up the costs you incurred in obtaining the home, and the costs incurred when you sold the home – such as escrow and title fees, real estate commissions and legal fees. (Mortgage interest and points are not part of your cost basis, since these are separate itemized deductions.)

Additionally, any material improvements you made to the home during your ownership can be counted towards your cost basis. However, is a sticky topic. The IRS says that “repairs” and “improvements” are not the same thing.

IRS Publication 523 defines “improvements” as modifications that “add to the value of your home, prolong its useful life, or adapt it to new uses.”  The same publication goes on to say:

“You can include repair-type work if it is done as part of an extensive remodeling or restoration job. For example, replacing broken windowpanes is a repair, but replacing the same window as part of a project of replacing all the windows in your home counts as an improvement.”

Of course, we can’t give you tax advice, nor is this article attempting to provide tax advice. You can learn more about how the home sale tax exclusion works by reading IRS Publication 523, and by discussing your situation with a professional tax preparer. Please note, the link to Publication 523 was the most recent available at the time of this post. IRS guidelines change frequently, and updated guidelines for the current tax year, as well as 2018, are still pending.

Maximizing the profit on your Houston home sale begins with an expert market analysis by the KW Energy Corridor Team! Let us provide you with a personal real estate consultation and customized strategies for a top-dollar sale. There is no fee, and no obligation.

Our professional resources, local expertise and global marketing will be your advantage! Contact us today!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079

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Texas law requires all real estate licensees to give the following information about brokerage services as well as this consumer notice to prospective buyers, tenants, sellers and landlords:
Texas Real Estate Commission Information About Brokerage Services - Texas Real Estate Commission Consumer Protection Notice