You’ve finally sold your home. Do you owe capital gains taxes to the federal government? It depends.
The federal tax laws concerning capital gains tax on the sale of real estate changed over 15 years ago but many people are not aware of the changes. The general rule is that, if your profit is less than $250,000 per person ($500,000 for a married couple), you do not owe federal capital gains tax. There are a few other rules that apply. The house must have been your principal residence. You must have lived in that house as your principal residence for 2 out of the last 5 years, but the two years does not have to be continuous.
To calculate whether you owe capital gains tax, you start with your sales price and deduct allowable selling expenses such as your real estate agent’s fee, advertising costs, and your lawyer’s fee. You…
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