Home selling tax deductions can amount to sizable savings when you file with the IRS. So, whether you’re selling your home soon or sold it last year, you will want to know all the tax deductions, exemptions, and other write-offs.
You can deduct any costs associated with selling the home, including legal fees, escrow fees, advertising costs, and real estate agent commissions. This could also include home staging fees. In 2018, these deductions are still allowed under the new tax law.
Home Improvements & Repairs
If you renovated a few rooms to make your home more marketable, you can deduct the cost of those upgrades. This includes painting the house, repairing the roof or water heater, or anything that was useful to selling the home. However, if you need 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.
If you were dutifully paying your property taxes up to the point when you sold your home, you can deduct the amount you paid in property taxes for the time you owned it. In 2018, this deduction is still allowed, but your total deductions are capped at $10,000. You may be able to avoid this cap if you prepaid your 2018 taxes and if your property was assessed in 2017, but estimated assessments won’t qualify.
You can also deduct the interest on your mortgage, up to a maximum of $1,000,000 for the portion of the year you owned your home. In 2018, new homeowners and sellers can deduct the interest on up to only $750,000 of mortgage interest, though homeowners who got their mortgage before Dec. 15, 2017 can continue deducting up to the original $1,000,000.
If you sold your home in 2017 in order to move for a job change, you can deduct those expenses. For 2018, lawmakers eliminated this deduction for most of us. However, members of the armed forces on active duty can still take this deduction.