You may be wondering if there are tax deductions when selling a home. The answer is yes. Check out this list to make sure you don’t miss any of them.
1. Selling costs
These deductions are allowed as long as they are directly tied to the sale of the home, and you lived in the home for at least two of the five years preceding the sale. Another caveat: The home must be a principal residence and not an investment property.
2. Home improvements and repairs
If you renovated a few rooms to make your home more marketable (and so you could fetch a higher sales price), you can deduct those upgrade costs as well. This includes painting the house or repairing the roof or water heater.
3. Property taxes
This deduction is capped at $10,000, Zimmelman says. So if you were dutifully paying your property taxes up to the point when you sold your home, you can deduct the amount you paid in property taxes last year up to $10,000.
4. Mortgage interest
As with property taxes, you can deduct the interest on your mortgage for the portion of the year you owned your home.
5. Capital gains tax for sellers
The capital gains rule isn’t technically a deduction (it’s an exclusion), but you’re still going to like it. As a reminder, capital gains are your profits from selling your home—whatever cash is left after paying off your expenses, plus any outstanding mortgage debt.
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