This year April 15 falls on a Monday —for many, that undoubtedly bodes ill for the weekend preceding. Tax time may be the leading contender for everyone’s least favorite time of year, yet there are some potential breaks of sunlight shining through the tax time overcast. Most of us know these already, but it’s still encouraging to remember the substantial advantage that Bainbridge Island home sellers stand to gain:
- Most Bainbridge Island home sellers who have owned and lived in their primary residence for at least two of the preceding five years can exclude $250,000 of any gain (up to $500k for those filing joint returns). This is a gigantic incentive for homeownership. The major exception comes for those who have taken this deduction within the previous two years.
- You may be able to deduct losses from an income property, though home sellers may not deduct losses from the sale of their primary residence. Why not? Ask the rule-makers!
- Special rules are likely to apply to Bainbridge Island home sellers who received the one-time First Time Home Buyer Credit when they bought their property. This is another area where you should seek qualified tax advice; one example is the special consideration that may be granted for those who have not previously deducted all the points paid for their mortgage. Details are in IRS Publication 523 — at last check, the rules are unchanged (the ‘Recent Developments’ heading is refreshingly empty).
This all goes to reinforce the point that Bainbridge Island home sellers should always be sure that they leave none of homeowners’ tax benefits on the table. Uncle Sam provides them to encourage taxpayers to behave in ways they believe to be beneficial to all of us: home ownership is decidedly one of those.
As always, be sure to consult your tax professional for all major moves. And when you’re ready for a real estate professional, I’m here to help every step of the way!