202. Tax Tips For Selling Your Florida House!

Tax season is approaching, and for those who are in the process of selling their homes in Florida, here are some valuable tax tips to consider. Please note that this article is provided for informational purposes only and should not be considered as professional tax advice.

For specific questions, contact a trusted tax professional, or the IRS! 

Not All Profits Are Taxable

An opportunity awaits whereby a significant portion of your profits can be excluded, provided specific criteria are satisfied. Typically, an exclusion of $250,000 is within reach, and for those filing a joint return, this figure can soar up to $500,000. (However, in the event of a loss, no deduction can be claimed for such an amount.)

It is essential to note that this deduction is exclusively applicable when selling your primary residence and can be utilized once every two years. To be eligible for this deduction, it is imperative that you have resided in the abode for at least two of the previous five years.

Of utmost importance is the timely update of your address with the Internal Revenue Service (IRS) whenever a relocation occurs.

Other Exclusions

If the aforementioned requirements cannot be met, there exists the possibility of excluding a segment of your profits from being subject to income tax. Numerous distinctive circumstances exist, whereby meeting certain conditions allows for a proportionate and tax-exempt gain. Should the need to sell arise due to alterations in one’s well-being, a vocational transition, or unforeseen events, it becomes feasible to deduct a portion of the profit.

Reporting the Sale

If a 1099-S form is received from the closing agent, it becomes imperative to report the sale. This particular document furnishes the IRS with pertinent details concerning the proceeds generated from real estate transactions. To circumvent the reporting requirement, it is essential to ensure the complete exclusion of all profits. Notify the agent during the closing process that the issuance of the form will be unnecessary. However, even if the deduction of all profits is feasible, the filing of the form with the IRS remains obligatory in the event it is issued, regardless of any outstanding monetary obligations.

Capital Gains Taxes

If the disposition of your investment property or recently acquired house takes place, you shall find yourself subject to the imposition of the capital gains tax. The tax liability associated with capital gains is contingent upon the magnitude of your earnings. Individuals with a lesser income shall remain exempt from the payment of capital gains taxes, while those situated in higher tax brackets may encounter a tax burden that can ascend to as much as 20%. It is important to note that short-term assets are typically subjected to taxation in a manner that aligns with the treatment of ordinary income.

First-Time Homebuyer Credit

The extent to which you may be required to reimburse the entirety or a portion of the credit granted to you is contingent upon the specific dates of your property acquisition and subsequent sale. Generally, if you relocate within a timeframe of 36 months subsequent to the purchase of your dwelling, it becomes incumbent upon you to repay the credit upon the disposition of said property. Special rules apply and can be found in Publication 523 from the IRS.

Deduct Selling Costs

When embarking upon the sale of your residence in the vibrant city of Florida, it is imperative to recognize the potential tax advantages that may arise. You have the opportunity to offset a multitude of reasonable expenses associated with the sale, encompassing but not limited to closing costs, property enhancements aimed at optimizing marketability, evaluations, promotional expenditures, and real estate agent commissions. Meticulous record-keeping of every penny invested in your endeavor to sell your abode can yield substantial deductions come tax season, significantly impacting your overall financial standing.

Regardless of the specific period during which you choose to list your property, it is always prudent to seek the guidance and expertise of seasoned professionals. Engage in open dialogue with your trusted real estate agent, proficient accountant, and competent attorney to ensure that you have meticulously structured the most favorable terms and conditions for yourself.

Rest assured that the intricacies of taxation need not be a source of excessive concern when offering your cherished dwelling on the market within the realm of Florida. The probability of relinquishing a substantial portion of your proceeds to the taxman is considerably low, allowing you to retain a significant portion of your hard-earned profits unencumbered.

Do you want to sell your house in Florida? We can help! Send us a message or give our office a call today! (786) 904-1444

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