From Yahoo Finance: 2025-05-04 08:30:00

Buying a house is a great investment, but it comes with tax issues. Profit from selling a house can be subject to ordinary or capital gains tax rates, but there are ways to reduce or avoid capital gains taxes with the help of a financial advisor.

Selling a house can trigger capital gains taxes, but homeowners can exclude up to $250,000 (single) or $500,000 (joint) of profits if certain conditions are met. This exclusion can be increased by adding improvements and other related costs to the tax basis of the home.

Improvements made to a home, such as adding a deck or upgrading windows, can reduce taxable gains. Consult a financial advisor to determine which costs can contribute to your basis and further reduce your tax liability.

Capital losses from other investments can offset gains on a home sale, reducing the taxable amount. Tax laws can be complex, so seeking advice from a financial advisor or tax professional is recommended to accurately calculate your tax liability.

Consider options like a like-kind exchange or rolling gains into a new home to delay or reduce taxes. Consult an experienced advisor before attempting these strategies. Proper planning can significantly impact the amount of taxes owed on the sale of your home.

Maintain an emergency fund to cover unexpected expenses. Keep funds in a liquid account to have quick access, but consider high-interest accounts for potential growth. Consulting a financial advisor can help you evaluate the financial impact of selling your home and plan for your future.



Read more at Yahoo Finance: I’ll Net $675K From Downsizing My Home. What Can I Do to Avoid Capital Gains Tax?