February 27th, 2020 4:26 PM by Jackie A. Graves, President
Remind your sellers
to ask their financial advisers about the tax deductions they’re eligible for
in a home sale. One of the big ones they may qualify for: selling costs.
as the costs are directly tied to the sale of the home, they qualify for tax
breaks. Also, sellers who have lived in their home as their principal residence
for at least two out of the five years prior to selling it can earn tax
advantages. “You can deduct any costs associated with selling the
home—including legal fees, escrow fees, advertising costs, and real estate
agent commissions,” says Joshua Zimmelman, president of Westwood Tax and
Consulting in Rockville Center, N.Y.
experts warn that these costs can’t be deducted like mortgage interest. They
are subtracted from the sales price of the home. That turns into a capital
potential deductions for sellers are home improvement and repair costs. Sellers
who made renovations to make their home more marketable may be able to deduct
those costs from their taxes. Renovation projects could include painting the
house or repairing the roof or water heater, for example. “If you needed to
make home improvements in order to sell your home, you can deduct those
expenses as selling costs, as long as they were made within 90 days of the
closing,” Zimmelman says.
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