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Tax Information When Selling a Home

Taxes, taxes, taxes. One of the more elusive aspects of real estate, and also the one nobody ever wants to think about. For the most part, any profit from home sales is not subject to being taxed, due to the 1997 Taxpayer Relief Act passed by former President Bill Clinton. While this is the general case, there are some exceptions to this act where there are tax payments required on a portion of the sale. Being aware that this is a possibility prior to selling will help ease some of the general stress in the process. Most people do not anticipate having to pay taxes on home sales, but we want to make sure to educate you on what instances could find taxations. It does not hurt to be overly aware, even it never applies to you.

Property taxes can be an overwhelming topic and full of confusing jargon, which is what puts most people off from equipping themselves with knowledge ahead of time. Rather than educating, people often avoid the topic altogether, which, in the end, could end up financially scarring them. We hope to simplify and clarify the topic of taxes by discussing who qualifies for tax-exemptions.

How do I know if I will have to pay taxes?

The answer to this depends on a few factors. If you have owned and lived in the home for two of the five years prior to the sale, then up to $250,000 of the profit will be tax-free. If you are married and file a joint tax return with your spouse, this amount doubles to $500,000. These amounts would be considered exclusions from your regular taxable income, however, if you sold at a loss, you do not receive a deduction of any kind. So what if your profit exceeds either of these two limits? However much rolls over must be reported as a capital gain on Schedule D. We will discuss capital gain in Part 2.

Qualifications for tax break from selling a house

There are three things that must be true in order for you to qualify for tax-free income from your house:

  1. Ownership. You must have owned and lived in the home for a minimum of 24 months (2 years) within the 5-year period prior to the sale date. You might be wondering why they specify the five-year time frame. This would be in the event, for example, that you lived in a home for a period of time and then rented it out to a tenant for one to three years before the sale date. In that case, you would still qualify as long as you lived in the home for two of those years within the five-year time frame.
  2. Residence. As we mentioned before, in order to qualify for tax exemption, the house in question must have been your primary residence for at least two of the five years prior to selling.
  3. No other exclusions. You cannot have used the tax exemption for profit from a home sale on another house within two years prior to the current sale. 

Disqualifying Factors

If you are still unsure whether or not you qualify, read through this list and make sure you do not fit under any of these:

  • You did not live in the house for at least two years within the five-year time frame preceding the sale. (However, there are special circumstances for certain qualifying people, for example, those with disabilities or service members in the military. We will discuss this further in the next section.)
  • You did not own the property for two years or more within the five-year time frame preceding the sale.
  • The house was not your primary residence
  • You claimed the $250,000 or $500,000 tax-exempt income on another home within two years prior to the current sale date.

Two circumstances which will automatically disqualify you, regardless of special circumstances are:

  • You purchased the home through a like-kind exchange, also known as a 1031 exchange which involves swapping one investment property for another, in the past five years.
  • You are subject to expatriate tax.

What if I don’t qualify?

  1. Servicemembers, Foreign Service, intelligence agencies. A person who falls under this category can elect to have the five year period for residency suspended for up to ten years during any period of time that they or their spouse serve on “qualified official extended duty” as a member of the military, uniformed services, Foreign Service, or federal intelligence agency. Qualified extended duty constitutes as a period of time for more than 90 days where you are stationed at least 50 miles from your primary residence or residing in government housing under government orders.
  2. Those with disabilities. If you become physically or mentally unable to care for yourself, you simply need to show that your home was your residence for 12 months out of the 5-year time frame leading up to the date of sale. Any time you may have spent living in a care facility also counts toward your residence requirement, as long as the facility in question holds a license from the state or other political entity that certifies them to provide care for those with your condition.
  3. Divorcees. If you were separated or divorced before the sale date, you can treat the home as your residence if you are the sole or joint owner and the divorce or separation agreement enables your former spouse to live in the home and consider it as his or her main residence. If the home was transferred to you (regardless if in connection with a divorce or not) you may count any time when your spouse owned the home as the time that you owned it as well, as long as you meet the residency requirement on your own.
  4. Widowers. If your spouse passes away and the surviving spouse does not remarry before the home is sold, the surviving spouse may count the time the deceased spouse owned and used the property towards qualifying for tax exemption. As a widow, you may also potentially qualify for the higher amount of $500,000 of exemptions if: 1) You sell your home within 2 years of your spouse’s death, 2) You have not remarried at the time of sale, 3) Neither you nor your late spouse used the exemption on a different home sold less than 2 years before the date of the current sale, and 3) The 2-year ownership and residency requirements have been met.

What if I still don’t qualify for a tax exemption?

If you’ve gone through the list from top to bottom and are still unsure whether or not you qualify for a total exemption, it is possible you could still qualify for a reduced exclusion. This usually occurs in the event that:

  • You need to make a sudden move due to a work-related change. Specifically, if you transfer to a new job that is 50 miles or further than your last job was from the property. For example, if your current job is 10 miles from your home but your new work location is 60 miles away. This also applies to your spouse as well. In addition, if you take on a job after previously being unemployed and that job is 50 miles or further away, you may qualify.
  • Move due to health-related issue(s). If you must move to help care for an ailing family member or loved one, or you yourself are seeking long term care for a health-related issue, you may qualify. 
  • Something unforeseeable occurs.
    • Your home was destroyed or suffered casualty due to a man-made or natural disaster. 
    • A spouse, co-owner, or any resident of the home dies.
    • You became divorced or legally separated.
    • You or your spouse gave birth to two or more children in the same pregnancy.
    • You became eligible for unemployment compensation.
    • Loss of ability to pay for basic living expenses due to extenuating circumstances.

For a more detailed look into who qualifies, visit the IRS’s Publication 523, which contains helpful Introductory Material for those selling their home and wondering about taxes. Now that you probably have a good idea of whether or not you qualify for tax exemption for the income from the sale of your home, stay tuned for Part 2 of Everything You Need to Know About Taxes and Selling a Home, which will tackle more complex subjects such as your tax return, gain on sale and capital gain, adjusted basis, and more.

jesse phalin
jesse phalin
01:29 18 May 21
Thank you, Thank you, Thank you! Went above and beyond assisting me through this process. Helped me move my things and even let me leave what I wasn’t taking with me. Thanks for all of the hard work.
Kelly Stewart
Kelly Stewart
21:27 08 May 21
My husband handled the process but felt good dealing with this local company and they did not try to change price after seeing the house. They actually offered higher once they saw our home. Had 5 companies come our to give us bids and they all were bait and switch. They beat everyone’s offers too. We tried to list before and couldn’t sell. I don’t know why anyone would work with head aches of real estate agents and paying commissions, banks, inspectors and the time to close only to walk away with the same money. Thank you Ryan and Jamie.
degan Stewart
degan Stewart
21:23 08 May 21
Thank you guys so much. Jamie is so sweet and on it. Ryan Is one of the most genuine people I’ve met in Vegas. They did what they said they’d do when they said they would and kept us in the loop the whole time
Brian Higgins
Brian Higgins
22:00 04 May 21
Thank you guys so much for everything. Ryan and Jamie Helped me find a place to get out of our old place. It was so nice to have the moving company just handle everything for me.
Sheila Winn
Sheila Winn
19:05 09 Apr 21
I struggled with the idea of selling my house to a "flipper". This company was fair, professional and extremely helpful every step of the way. I never had to wait for a response from Kelly Schnippel when I had a question or concern.I personally would recommend them to anyone looking to get a fair price for their property all the while getting kindness, professionalism and assistance from the buyer.Thank you Kelly Schnippel! I appreciate YOU and your team!Sheila Winn
Valerie Grijalva
Valerie Grijalva
17:30 27 Feb 21
Casey and his team will handle your transaction with the upmost professionalism and class like no other. Their knowledge in real estate will exceed your expectations and you won't be disappointed from beginning to end with their communication and systems to ensure your goals are met. I highly recommend Casey and his team!
Ann Reback
Ann Reback
18:51 25 Feb 21
Thank you for your professional and personal help in this process. You and your team have been so knowledgeable, responsive, courteous and kind...understanding my goals and executing each step in a timely and professional manner! THANK YOU! I will recommend you and your team to friends and others in our community.
Aviv Ben Shimon
Aviv Ben Shimon
16:38 25 Feb 21
Jess Lapensee
Jess Lapensee
16:31 25 Feb 21
From start to finish the selling process was quick and easy!
Eyal Karban
Eyal Karban
16:22 25 Feb 21
The best team in the business!Really helped us to cash out our home, very fast, very professional, great price, thank you!
jevim kale
jevim kale
04:17 27 Jan 21
Best experience with We Buy Any Vegas House. Extremely knowledgeable about home selling process and marketing. Wonderful people to work with. Highly recommend if you are looking to sell your home in Las Vegas NV.
Kate 7Timmons7
Kate 7Timmons7
01:02 26 Nov 20
We were looking to sell our home and called We Buy Any Vegas House so we could get more information. We spoke to Casey Ryan. Ryan was informative, answered our questions, and he went out of his way to give us the best advice on selling our home. Kelly was also helpful and was quick to answer any questions we had.We recommend calling We Buy Any Vegas House to anyone interested in selling their home.
Towik Jes
Towik Jes
05:36 16 Nov 20
I recently helped my parents sell their home due to unforeseen events and We Buy Any Vegas House.com made the process smooth and easy. Their company offered a very reasonable price for my parents home and they closed in 30 days as promised. Look no where else!
Alexa Pughlet
Alexa Pughlet
04:15 17 Sep 20
We Buy Any Vegas House is a very good company to work with, they were very professional and knowledgeable about their business. They made it very easy to work with them. If i ever had to sell my house again I would definitely call them first. Thank you guys for helping me out in my time need.
Pauletta Smith
Pauletta Smith
21:08 02 Sep 20
I contacted them on 8/06/2020 and had my check in my hand on 9/01/2020! They were fast, professional, and gave me a very fair offer for my property. I had to get out of my house pretty quick because of a medical problem and I was able to do most of the paperwork on line. The title company they worked with was great. Very fast and very thorough. No snags. Easy transaction! Signed all the papers and had my money 5 days later. I would recommend them to anybody. Plus...packed and took what I needed and left the rest. No cleaning or trying to find someone to take what I didnt want. Awesome! Thank you.
James Aimery
James Aimery
05:11 08 Aug 20
We Buy Any Vegas House was a great business team. Staff were helpful, friendly and responsive. I was able to sell my house within 2 months in an area where real estate agents are struggling with many properties on the market for much longer periods. I would recommend them to anyone thinking of selling.
Wayne Romerobel
Wayne Romerobel
03:57 30 Jun 20
These guys are the best place to sell your house in Las Vegas. They gave me a fair price and closed quick for maximum convenience. These people are professional, efficient, and extremely friendly.
Lynne M
Lynne M
04:52 24 Jun 20
I have nothing but positive things to say about this company! I needed to sell a house quickly after a death in my family. I spoke with several Cash for Houses Companies in Las Vegas and settled on We Buy Any Vegas House. Everyone was very sensitive about my situation, helpful, answered all my questions and extremely responsive when I called. Ryan and Kelly were awesome!After we settled on a price everything went super smoothly in escrow and again if I had any concerns or questions there was immediate feedback. Also the fact that I was able to do this remotely as I live in California was extremely helpful! I am so grateful for all the help I received during a very challenging time in my life.
Frank Lyod
Frank Lyod
04:21 12 Jun 20
Great team! Glad we chose We Buy Any Vegas House team who understood the market of real estate in our city. They gave us a fair cash offer for our home. We accepted and closed very quickly. We are happy with the outcome and the way we were treated from start to finish.
Sharla Olivaresretento
Sharla Olivaresretento
04:20 28 May 20
Had a really great experience working with We Buy Any Vegas House.com! I really needed to sell my house in Las Vegas and they helped out. Thank you so much!!
Tom Cruz
Tom Cruz
04:11 12 May 20
If/when I do decide to list my home, We Buy Any Vegas House will be the first place I call. They are professional, helpful, and friendly. They provided a lot of helpful information during the course of our business.
Robinson Hunk
Robinson Hunk
04:31 25 Apr 20
We Buy Any Vegas House buyers is a great blessing to my family. Our house was actually sold very fast, in just 7 days processed. Thank you so much!
Florinda Shuff
Florinda Shuff
04:42 08 Apr 20
Las Vegas home buyers has been great to work with. They’re very knowledgeable in real estate and always do what they say. I highly recommend We Buy Any Vegas House.
Florinda Shuff
Florinda Shuff
04:53 21 Jan 20
I got an amazing job offer down in Las Vegas and needed to sell my house fast. First, they explained everything to me and how it all works (selling your house for cash). The process was pretty easy and quick which I appreciated greatly!!
Freddy Aleman
Freddy Aleman
18:47 27 Dec 19
My wife and I recently bought a home from Casey Ryan. The home we purchased is located in Centennial Hills. Gorgeous remodel. Casey and his team did a great job of designing the home. We ran into a couple of issues shortly after moving in. Casey had his people out quickly during Christmas week to make a couple of repairs. He gave my wife and I peace of mind during a chaotic holiday week and for that we will always appreciate him. I would recommend a Casey Ryan home to my friends and relatives.
Angela Rienstra
Angela Rienstra
21:06 26 Dec 19
I needed to sell my house from out of state ASAP. I looked into some other larger name companies and was disappointed with their turn-around time and lack of customer service. I'm so grateful to have found Ryan (and Kelly)! They understood my time crunch and moved heaven and earth to buy my house at a fair price and closed by the promised date. They were with me every step of the way and offered world class service! 100% would recommend to anyone!
Sue Kuckelmann
Sue Kuckelmann
17:02 16 Nov 19
We couldn’t be more pleased with the service provided. From start to finish the team was professional and extremely helpful. All the deadlines were met or exceeded even when I was in Arizona and my husband was in Las Vegas. I would recommend them to anyone who is looking to sell in Las Vegas.
Sam Thompson
Sam Thompson
17:47 25 Oct 19
Great people and very professional. Treated me and my situation fairly and with care.
Mandy Majano
Mandy Majano
01:49 07 Oct 19
They did exactly what they said they would. Great company! Highly suggest!
Anthony Montonini
Anthony Montonini
01:31 07 Oct 19
Thank you guys. We were selling our house to Casey And Ryan and there was some HOA liens that totaled over $40k and they met with the HOA board with me and got them reduced to less than $5k so I walked away with $35k more than I thought I was going to. True professionals!
Nicole Dur
Nicole Dur
01:20 07 Oct 19
My grandma needed help selling after my grandpa passed :( anyways I found them through google and they really treated her like their own family. And let us leave a lot of the stuff she had accumulated over 40 years in the house. Thank you Casey and Ryan!!
pat rolman
pat rolman
01:13 07 Oct 19
These guys have true character. We signed agreement to buy my house then my situation changed and they didn’t force me to move forward. Then 2 months later I needed to sell it and they helped me find a new place any everything. They are really Great people.
That_one_random_ Crafter
That_one_random_ Crafter
00:06 24 May 19
This was so easy Casey was very helpful and kept in contact through the entire process thank you again for everything. Highly recommend this company.
Lela Leedham
Lela Leedham
03:08 22 Feb 19
Great experience working with Casey and Ryan. We would recommend them anytime. They are very knowledgeable and very professional.
Emily Binder
Emily Binder
21:16 18 Feb 19
Jennifer Gibbs
Jennifer Gibbs
19:58 18 Feb 19
A very impressive operation. Very professional and knowledgeable. They follow up when they say they will. Very helpful Team. If you're looking for a fast and fair cash offer on your home, these are the guys to call!
Mario Elizondo
Mario Elizondo
19:58 18 Feb 19
Very professional and a pleasure to work with.
Danny O'Bannon
Danny O'Bannon
19:53 18 Feb 19
I called 5 different companies from google trying to find a company that would pay the most for my rental and their offer was higher than the others. Extremely streamlined process. Easiest transaction I’ve done
Ross Greene
Ross Greene
18:04 17 Feb 19
Ryan & Casey were great to work with! Absolute pro's in the business. I would definitely recommend them. If only I could give them more than 5 stars. Hope to work with them again soon! Thanks guys!
Pam Dickerson
Pam Dickerson
23:53 15 Feb 19
Excellent customer service! Helped us through the entire process. Highly recommend!
steve Balsacker
steve Balsacker
19:35 14 Feb 19
Me and my wife had gone through a divorce and we wanted a quick way to get rid of our property so we could just move on with our lives, Thankfully Ryan came in and helped us out, I didn't have the time to deal with the headache of people coming in and out as well as all the repairs that were needed. He gave me top dollar for my home and I was out in 7 days!
jason almeida
jason almeida
16:52 14 Feb 19
We have seen their signs around town and thought it was a scam, we decided to give them a call and I couldn't have been happier with our experience. They were professional and knowledgable, they paid for all closing costs and even helped with our family move. Great guys and great company! Thanks again!
Peter Floratos
Peter Floratos
04:51 14 Feb 19
This team handles their business right. They are a pleasure to work with.
Tyler Hubbs
Tyler Hubbs
04:38 14 Feb 19
Ryan and Casey treated me with patience and respect during the whole transaction! Very trustworthy and explained each and every question I had!! I would highly recommend We Buy Any Vegas House!!
Avraham Metal
Avraham Metal
01:58 14 Feb 19
As a Real Estate Agent I have sold properties to Casey and his Team. They are men of their word and have never let me down.
Dena Shapiro
Dena Shapiro
01:29 14 Feb 19
What an AWESOME experience!! Casey and Ryan are THE BOMB!! They either answer their phone ALWAYS or respond within minutes. They originally called to see if I wanted to sell but I wasn't interested in selling. However, my neighbor had to sell immediately so I referred them to her, she accepted their offer & they closed escrow within weeks. It would've been A LOT sooner but there were delaying issues on the seller side. Anyways, they got it closed & EVERYONE is happy!! Thank you so much Casey & Ryan :). YOU'RE THE BEST!!!
Ron Lorenzo Woods
Ron Lorenzo Woods
00:51 14 Feb 19
Great team with quick and professional service!
karina giraldo
karina giraldo
00:36 14 Feb 19
Knowledgeable, fair, and professional. I loved working with Casey. I did my research before selecting a company, and I’m so happy I went with them!
Cody R
Cody R
00:27 14 Feb 19
Casey runs a great company that's honest, easy to deal with, and is always fair. I'd absolutely work with him again!
Whitney Carter
Whitney Carter
21:42 08 Feb 19
Grateful to have worked with such a great company! Long story, short they really did help me through a tough time. No need to get into details, but this company really knows what they are doing. Thank you for all of your help with my home. Highly HIGHLY recommend!
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