One of the best tax savings deals going has to be the exclusion of gains on the sale of your principal residence.

knoxville tennessee homes for sale

The IRS regulations say that if you sell the home you have lived in for any 2 of the past 5 years then any gain (gain is the difference between what you paid for the house and what you sold it for) up to $500,000 for married taxpayers filing jointly and $250,000 for single filers is tax free.

In real world terms if you bought a house, say 6 years ago for $200,000 and you sell it today for $300,000. The difference between what you paid and what you sold for is $100,000.

If you have lived in that home for at least any 2 of the past 5 years your $100,000 profit is tax free (from federal income taxes).

Of course you should consult with a qualified tax professional for the best tax advice but it helps to know some questions to ask.

A loophole I was unaware of in the home sales exclusion that under certain circumstances you can still qualify for a portion of the maximum tax free gain if you’ve lived in your home as little as one year. Those circumstances are:

  • Death
  • Disability
  • Multiple Births from the same pregnancy
  • Change in employment
  • Change in self employment

If you meet the qualifying circumstances married taxpayer could still qualify for up to $250,000 and single folks up to $125,000 of tax free gain.

If you’re thinking of selling your Knoxville, Tennessee home please give me a call and let’s get started not only geting your home sold for the best price but saving some tax dollars for you.

Visit my website, www.KnoxvilleMLS.com for great tips on how to prepare your home to sell faster for more money.