Thanks to the “Taxpayer Relief Act of 1997″ you can now sell your principal residence (any home you have lived in for at least 2 of the past 5 years) and escape paying any capital gain taxes up to $250,000; $500,000 for married taxpayers filing jointly.

happy knoxville tn real estate taxpayer

Unlike most IRS documents it’s also very simple to calculate if you have a taxable gain on your sale.

Just take your contract sale price and subtract most of your selling expenses, i.e. your real estate sales commission, any advertising you may have paid for personally, legal fees, etc..

That will give you your amount realized or net before subtracting your adjusted basis.

Adjusted basis can be a confusing term to some but it just means what you sold your house for minus what you paid for it and most anything you’ve done to improve or maintain it.
Most anything you did to the house that has a useful life of over 1 year, i.e. replaced the existing heating & cooling system, put on a new roof, build a new deck, etc., can be added to your original basis making your adjusted basis even smaller.

With this new tax law the average American can sell their homes more often now to take advantage of appreciation in your area and usually owe no taxes on the profits.

If you’re selling your principal residence in the Knoxville area please visit my website, www.KnoxvilleMLS.com or www.PropertyPricer.com for a free, over the net price evaluation.

Please call or e mail me with any questions about how you can sell your home tax free or any other real estate questions.

NOTE: I am a Realtor, not a CPA. You need to check with a qualified tax professional before using this advice.

Technorati Profile