Tax Impact When Selling

A.    There are many factors that can affect your taxes as a result of selling your home.  Some examples include how the home was bought, how the home was used, and if you made any improvements while you owned the home.  For instance if you bought the home, it will affect your taxes differently than if it was gifted or willed to you.  Also, if the house was used as a rental or business property, then you will be affected differently than if the home was your primary residence.  Home improvements and costs associated with selling your home are items that can be used to offset some of the capital gains that you will have to pay taxes on.  These are all factors that need to be discussed with a tax professional. 

      In addition, the Federal Taxpayer Relief Act of 1997 allows for capital gains of up to $500,000 (if filing jointly) or $250,000 (if filing single) to qualify for exclusion if a variety of requirements are met.  This includes that you must have lived in the home for at least two of the previous five years.  There are some    exceptions, but in any case you may be able to get an exclusion so that you can     take advantage of what really is a tremendous advantage.         

       As far as state tax laws, they differ, but your tax consultant should be able to     help you address these.  If you are planning to move to another state, it may be wise to contact a tax consultant in both states to be sure that you come out the winner.