Capital gains tax is applied to profits earned from selling assets like homes. Homeowners can reduce taxable gains by utilizing 'adjusted basis'—subtracting related expenses. Notably, single filers can exclude up to $250,000 and married couples can exclude $500,000 from taxable gains when selling their primary residence, provided they have lived in the home for at least two of the preceding five years. Keeping careful records simplifies this calculation and helps homeowners maximize their savings while being aware of taxable amounts.
The IRS allows you to exclude up to $250,000 for single filers and $500,000 for married couples when selling your primary residence.
Keeping precise records of expenses can help homeowners lower their overall capital gains, making the tax less overwhelming than it seems.
To avoid capital gains tax on the sale, homeowners must have lived in the property for at least two of the five years leading up to the sale.
Understanding your adjusted basis, including deducting relevant expenses, is crucial for accurately calculating potential capital gains taxes.
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