Tax Tips

Tax tips for home buyers and sellers

While the 2019 tax filing season may be over, if you’re buying or selling real estate this year, you may want to consult a tax expert as well as a real estate agent.

“The key is to become a great record keeper — that can save you a big capital gains bill when you decide to sell,” said financial adviser Cameron McCarty, president of Vivid Tax Advisory in West Des Moines, Iowa, in an email.

McCarty offers the following tax-smart tips for real estate transactions:

For sellers: There is a capital-gains tax exclusion of up to $250,000 for a single person or $500,000 for a married couple filing jointly. This exclusion can be quite attractive to home sellers — especially if it results in a tax-free sale.

If the sale price minus the purchase price exceeds those amounts, it is still possible to reduce or even eliminate tax by providing a large basis on your property. The home’s basis is the purchase price plus improvements to your home, including remodeling and repairs.

Sellers can use this exclusion every time you sell a primary residence, so long as:

  1. You’ve owned and lived in the home you are going to sell for two years, and
  2. You haven’t used the exclusion from past profits from a home sale in the last two years.

For buyers: Homeowners who purchased a home in 2018 can deduct interest expenses on up to $750,000 of mortgage debt from their income taxes, which may allow them to itemize their returns and forgo the standard deduction.

“Many of my clients ask about pulling money out of their traditional or Roth IRA to help purchase their home,” said McCarty in an email. “The IRS offers an exception to the traditional IRA 10 percent early withdrawal penalty for first-time home buyers. There are specific eligibility rules for anyone considering withdrawing from a Roth IRA and tax implications for both choices. A financial professional can help make sure you’re making the smartest decision.”

Search For Homes In Dallas Texas

To search for a home in Dallas Texas, or to speak with me about selling your home, contact me today at (972) 523-1389 or click here to connect with me online.

Growing up in Tarrant County and later moving to Dallas County, Heath is well versed in the Dallas-Fort Worth Metroplex. After graduating from Southwest Texas State University, and then receiving his MBA, he wasn’t fulling his passion of remodeling houses and finding the next person to call it home. After remodeling a few house on his own, he decided to take it to the next level and help others find their dream homes to accomplish their goal of calling it home. “I really want to be the Real Estate Professional that remembers the agony of waiting to hear back from buyers or sellers on a sale and ensure communication is fulfilled along the way, the waiting can be torture when you are excited for your next buy or sell”. Dedication, professionalism and the “can do attitude” are all the traits you will find in Heath.

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