By Elizabeth Rosen
NEW YORK (IRS.com) — If you are buying a house, you know you are likely to get some tax help in the form of tax deductions for mortgage points you pay as well as the mortgage interest you pay on the loan during the year.
What about home sellers, though? Is there any tax help for those selling their property?
There is. If you have sold your house, you may be able to get tax help in the form of capital gains tax relief.
Capital gains tax help for home sales
Before 1997, when you sold a home, you had to pay capital gains tax unless you bought a new, more expensive home within two years of the sale.
Since the implementation of the Taxpayer Relief Act of 1997, however, you can avoid capital gains tax on profits up to $250,000 if you are a single filer ($500,000 if you are filing jointly).
This is not a one-time tax break, either. This tax help is on a “per sale” basis, so each time you sell your home, you can take advantage of this relief.
It is important to note that there are requirements to meet to be eligible for this tax help. First, the home sale has to be on your primary residence.
If you are selling a property you bought as an investment or a home you’ve been renting out, you will still be subject to capital gains tax on the sale.
You can get around this habitation rule, though, if you live in the home as a primary residence for at least two of past five years. So you can move into a home you have been renting out to someone else, and as long as you live in it for two years you can still get the tax help.
On top of that, the two years do not have to be consecutive. As long as the total time lived in the home in the past five years equals 24 months, you are likely eligible for this tax help. You can live in the house for a year, rent it out for three years and live in it for the final year of the five.
For information about selling your home, visit the following websites: