Selling a home is always a challenging task, regardless of the circumstances. As a seller, you have to deal with many confusing aspects of the home-selling process, including taxes. Most homeowners find it difficult to understand what taxes they need to pay and how these taxes affect their finances. As cash home buyers, we buy houses in the Colorado Springs area and know a thing or two about what taxes you pay when you sell your home. If you are one of these homeowners, and you are currently selling a home, here is what you need to know about taxes.
Do I Have to Pay Any Taxes When Selling a Property?
The answer is yes — you will have to pay taxes on the amount you receive from selling your property. However, you should also know about some exceptions that will allow you to either eliminate taxes completely or reduce the amount you will need to pay.
If you have stayed in the house you are selling for at least two years, then $250,000 of the profit from the sale is considered tax-free. This will double ($500,000) if you are married and filing a tax return jointly with your spouse.
If your property costs less than $250,000, there are no taxes to pay. The home-selling process is completely tax free for you.
How to Determine the Profit You Will Receive From Selling Your Home?
In order to find out your profit, you will need to conduct certain calculations, and that might not be as easy as you think. The first step is to figure the actual price of your home. There are certain things you need to take into consideration. First, the actual price that you paid for your property. Second, the costs of all repairs, upgrades, and renovations that you have completed. For example, if you have renovated your bathroom and spent $5,000 on it, this amount should be added to the actual price of your home.
The next step is subtracting expenses such as realtor fees, closing costs, and other expenses from the amount that you sold your house for. For example, if you sold your home for $350,000, and you spent $50,000 on the abovementioned costs, the final amount from the sale is $300,000.
The last step is subtracting the cost basis from what you made from selling your home. If the amount that you receive after completing all these calculations is lower than $250,000, there are no taxes to pay.
A Reduced Exclusion Is an Option
Those who do not meet the requirements above have another option — a reduced exclusion. This is available to those homeowners who cannot meet the abovementioned requirements because of their change of job, health issues, or other unforeseen personal or family circumstances. If you are not sure whether you qualify for a reduced exclusion, talk to a tax professional who will be able to answer your questions and provide you with the necessary information.
Save Money on Your Home Sale — Sell Your House Fast to a Cash Buyer
Many homeowners do not know this, but there is one option that helps you make the home-selling process easier and less expensive. This option is selling your property to a cash home buyer. It is one of the easiest and cheapest ways to sell your home because you can avoid closing fees and realtor’s fees. The best thing about working with a home investor is that they buy all types of homes regardless of their age, condition, location, and other circumstances. They do not require any renovations or repairs. They will purchase your home as-is. If you own a property in Colorado Springs, CO, or any other surrounding town or area, and you want to sell your house fast, We Buy Houses Colorado Springs is ready to help. Our goal is to make the home-selling process as easy and stress-free as possible for our clients. Selling to us is the most efficient way to sell your home fast and avoid unnecessary fees. If you have any questions about our company or the process, feel free to contact us. We are always available and are always happy to help you.