Expenses You Can Deduct When Selling a House: Key Tax Tips for Home Sellers

Key Highlights

• Selling your home can lead to capital gains taxes, but numerous deductible expenses can reduce your tax liability.

• Deductible expenses include real estate agent commissions, closing costs (like attorney fees, title insurance, and transfer taxes), and eligible home improvements.

• You can also deduct advertising and marketing expenses, home staging costs, and certain repairs made to prepare your home for sale.

• Thoroughly document all expenses related to selling your home, including receipts, invoices, and contracts, for accurate record-keeping.

• Consulting a tax professional is highly recommended to ensure you are maximizing your deductions based on your circumstances and updated tax laws.

Introduction to Key Expenses You Can Deduct When Selling a House

Navigating the real estate world is not just about finding a buyer; it encompasses a multitude of factors that can significantly impact your financial outcome. One of the most critical aspects to consider is the understanding of tax implications, particularly the capital gains tax that is incurred when selling your house. This tax is applied to the profit you make from the sale of your property, and without proper knowledge, it can take a hefty bite out of your earnings.

Fortunately, there is a silver lining: various tax deductions are available that can help lower your overall tax liability. These deductions can include, but are not limited to, expenses related to home improvements, real estate commissions, and even certain closing costs. By educating yourself about these potential deductions and keeping meticulous records of your expenses, you may find that you are eligible to save thousands of dollars, which can significantly enhance your financial standing after the sale.

Moreover, it is essential to be aware of the specific criteria for claiming these deductions. For instance, if you have made substantial upgrades to your home that enhance its value, such as remodeling a kitchen or adding a new roof, these costs may be deductible. Additionally, if you are selling your primary residence, you may qualify for the home sale exclusion, which allows you to exclude a certain amount of capital gains from taxation, provided you meet specific ownership and use tests. Understanding the nuances of these tax laws is vital, as they can vary significantly depending on your location and individual circumstances.

Therefore, consulting with a tax professional or a real estate expert can provide you with tailored advice that takes into consideration your unique situation. This proactive approach not only helps in maximizing your profits but also ensures that you are compliant with all tax regulations. In summary, being well-informed about the tax implications of selling your home can make a substantial difference in your financial outcome. By taking the time to learn about available tax deductions and seeking expert advice, you can safeguard your hard-earned equity and potentially save a significant amount of money in taxes.

Understanding Home Sale Taxation

Selling your home involves more than just the sale price; it's a process with financial implications you need to consider. One key concept to grasp is capital gains tax, which is calculated based on the profit you earn from the sale of your house.

The positive aspect is that there are strategies to reduce your capital gains tax. Understanding how this operates and which deductions are available can significantly impact your financial outcomes. Familiarizing yourself with these deductions before selling your home can assist you in making informed decisions and boosting your profits.

The Basics of Capital Gains Tax

Capital gains tax is applicable when you sell an asset, such as your home, for a higher price than what you initially paid. This tax is imposed on the profit earned from the sale. To calculate your capital gain, subtract the original purchase price, referred to as the cost basis of your home, from the sale price.

The positive aspect is that you may not need to pay tax on your entire profit. Numerous homeowners can benefit from a capital gains exclusion, allowing them to retain a portion of their profit without it being taxed.

Understanding how capital gains tax functions is crucial for anyone considering the sale of their property, as it directly affects the financial outcome of such a transaction. Capital gains tax is imposed on the profit realized from the sale of an asset, in this case, your house, and comprehending the intricacies of this tax can significantly influence your financial planning. To effectively navigate this process, it is essential to be aware of your cost basis, which is essentially the original value of your property plus any improvements made over the years. This figure will serve as a benchmark for calculating your gains when you sell the property.

Additionally, there are certain exclusions that may apply when it comes to capital gains tax, particularly for primary residences. For instance, if you have lived in your home for at least two of the last five years prior to selling, you may qualify for an exclusion of up to $250,000 for single filers or $500,000 for married couples filing jointly. This exclusion can significantly reduce or even eliminate your taxable gains, making it a critical aspect to consider when planning your sale.

Furthermore, the landscape of tax laws can be complex and subject to change, which is why consulting with a tax expert is highly advisable. A qualified tax professional can provide personalized advice tailored to your unique financial situation, helping you to strategize effectively.

They can assist in identifying potential deductions, understanding the implications of your sale on your overall tax liability, and ensuring compliance with current tax regulations. By taking the time to educate yourself about these elements and seeking expert advice, you can make informed decisions that will positively impact your financial future when selling your home.

How Your Home Sale Qualifies for Tax Exemption

One significant advantage for homeowners selling their primary residence is the opportunity for a tax benefit known as the capital gains exclusion. This benefit can allow you to protect some or even all of your profit from capital gains tax, depending on your circumstances.

To qualify for the full exclusion, you must have owned and lived in the home for at least two out of the five years preceding the sale date. The exclusion lets you avoid paying taxes on up to $250,000 if you are single or up to $500,000 if you are married and filing jointly.

Understanding these rules and how they apply to your situation is crucial. This helps you assess your tax liability and make informed decisions about when to sell and how to maximize your tax savings.

Key Deductible Selling Expenses

When you get ready to sell your home, you might focus too much on the details and forget about the financial implications. It’s easy to get caught up in the aesthetics of your property, like fresh paint or landscaping, but a key part of making more profit from the sale of your home is to keep track of and subtract the selling expenses that you can deduct from your taxable income. Understanding these financial aspects is crucial, as they can significantly impact your overall profit from the sale. These deductions can help lower your capital gains tax bill, which is a tax on the profit made from the sale of your property, and ultimately give you more cash in hand when the sale is finalized.

There are various expenses you can deduct, and it’s important to be aware of them. For instance, the fees you pay to your real estate agent typically represent a substantial portion of your selling costs. These commissions, which can range from 5% to 6% of the sale price, are often one of the largest deductions you’ll be able to claim. Additionally, costs associated with staging your home, which may include hiring professional stagers or purchasing new furnishings, can also be deducted. Staging can enhance the appeal of your home, potentially leading to a quicker sale or a higher selling price, making it a worthwhile investment.

Also, advertising expenses are another category of costs that can be deducted. This includes any marketing efforts you undertake to promote the sale of your home, such as online listings, printed flyers, or even hosting open houses. Each of these expenditures adds up, and when properly documented, they can significantly reduce your taxable income from the sale.

Learning about these deductions and keeping your records clear and organized is very important. Maintaining detailed receipts and documentation of all selling-related expenses not only helps you in claiming these deductions but also prepares you for any inquiries from tax authorities.

This proactive approach can save you money and ensure that you are compliant with tax regulations. By effectively managing your selling expenses, you can lower your tax bills and ultimately end up with more money after the sale. In the long run, being informed and strategic about your home sale can lead to a more profitable outcome, allowing you to maximize the financial benefits of your property transaction.

Real Estate Agent Commissions

One of the biggest costs you can deduct when you sell your home is the real estate agent's commission. Usually, sellers pay a commission to both their listing agent and the buyer’s agent. This amount is often a percentage of the sale price. Even though these commissions can look high, keep in mind that they are fully deductible.

The commission you pay includes many services. These are marketing your home, showing it, negotiating offers, and handling the complex closing process. When you calculate your deductible expenses, make sure to include both the listing agent's and the buyer's agent's commissions.

By deducting these commissions, you lower your taxable income. This also reduces your capital gains tax liability. This deduction highlights how beneficial it can be to work with real estate professionals when selling your home.

Home Improvement and Repairs for Sale Preparation

Most regular home repairs cannot be deducted from your taxes. However, some improvements can help increase the value of the home and sell it for a better price and may be eligible for tax deductions. These improvements are called enhancement expenditures. They usually increase your home's value or make it last longer, which helps with its sale.

Here are some examples of home improvements that might qualify for tax deductions:

• Big kitchen or bathroom renovations

• Putting on a new roof, windows, or siding

• Installing new floors or central air conditioning

• Building a deck or patio

Keep in mind that these deductions follow certain IRS rules. It’s a good idea to talk to a tax expert to see if you qualify.

Closing Costs and Legal Fees

Closing costs are an integral part of the home-selling process, and they play a significant role in shaping your overall financial picture when it comes to the acquisition and sale of property. These costs encompass a variety of fees and expenses that are incurred during the final stages of the transaction, and understanding them is crucial for any seller. Importantly, some of these costs can also provide potential savings when it comes to your tax obligations. For instance, legal fees associated with the sale of your property are often deductible. These fees are not just arbitrary charges; they cover essential services such as reviewing and negotiating contracts, ensuring that all legal requirements are met, and facilitating a smooth transfer of ownership from the seller to the buyer.

In addition to legal fees, there are several other expenses that you may be able to deduct from your taxable income. For example, title insurance, escrow fees, and transfer taxes are common closing costs that typically appear in your closing disclosure statement. Title insurance protects against any potential issues with the property's title, while escrow fees are charged for the services provided by the escrow company, which acts as a neutral third party to handle the funds and documents involved in the transaction. Transfer taxes, on the other hand, are levied by state or local governments when the property changes hands. It is crucial to review your closing disclosure document meticulously, as it outlines all the costs associated with the sale, allowing you to identify which expenses are eligible for deduction.

Understanding which closing costs and legal fees are tax-deductible can significantly impact your overall financial outcome from the sale of your property. By accurately calculating your total selling expenses, you can lower your taxable income, thereby reducing your tax liability. This means that you may end up keeping more of the proceeds from the sale, which can be particularly beneficial if you are looking to reinvest in another property or simply bolster your savings.

Additionally, being well-informed about these deductions not only aids in financial planning but also empowers you to make more strategic decisions regarding the sale of your home. In conclusion, taking the time to familiarize yourself with the various closing costs and their tax implications can lead to substantial savings and a more favorable financial outcome from your real estate transaction.

Non-Deductible Selling Expenses

While you can deduct many costs when selling your home, it is crucial to understand that not all expenses qualify for tax deductions. Knowing the difference between deductible and non-deductible expenses is vital for accurately preparing your tax return and ensuring compliance with IRS regulations. To aid in this process, it is advisable to consult IRS Publication 523, which provides detailed guidance on the sale of your home and the associated tax implications. By familiarizing yourself with these rules, you can effectively navigate the complexities of tax deductions and avoid potential penalties that may arise from incorrect filings.

Some examples of non-deductible expenses include moving costs, which encompass the expenses incurred when relocating from one home to another. These costs often include hiring professional movers, renting moving trucks, and purchasing packing supplies. Unfortunately, the IRS categorizes these expenses as personal in nature, and thus they cannot be deducted from your taxable income when you sell your home. Additionally, home warranty policies purchased for the benefit of buyers also fall into the non-deductible category. While these warranties can offer peace of mind to new homeowners by covering the costs of repairs for certain appliances and systems, they are not considered direct expenses related to the sale of the home.

Furthermore, there are incidental costs that may arise during the selling process, such as general repairs or maintenance work that does not contribute to enhancing the overall value of the property. For example, minor fixes like patching up holes in the wall or repainting a room to make the home presentable for potential buyers may not qualify for deductions, as they are viewed as personal expenses rather than improvements that add significant value to the home.

The IRS typically distinguishes between repairs that maintain the current condition of the home and improvements that increase its market value. Therefore, understanding this distinction is essential for homeowners aiming to maximize their deductions while ensuring they remain compliant with tax laws.

In summary, being aware of which expenses are non-deductible is an important aspect of the home-selling process. By keeping meticulous records of all expenses incurred during the sale and consulting relevant IRS publications, you can better prepare for tax season and optimize your financial outcomes. This knowledge not only aids in the accurate reporting of your taxes but also helps you avoid any unexpected liabilities or penalties that could result from improper deductions.

Home Warranty Policies for Buyers

In the crowded real estate market, sellers often think about giving special offers to attract buyers. One popular offer is a home warranty policy. This policy can provide buyers with peace of mind by covering unexpected repairs during the first year of owning the home. Additionally, sellers should consider including a title insurance policy, as it protects buyers from potential legal issues. Although a home warranty can help sell the property, sellers should know that the cost is not tax-deductible.

Home warranty policies are seen as an extra expense when selling. They are not considered direct costs like real estate agent commissions or closing costs, which can be deducted from taxes.

Even though a home warranty cannot help with taxes, offering one can be smart for sellers. It may draw more buyers and help speed up the sale.

Moving Expenses and Related Costs

The joy of moving into a new home often comes with the challenges of planning and spending money. For most homeowners, moving costs like packing supplies, transportation services, and various other expenses that arise during the relocation process can quickly add up, placing a significant financial burden on individuals and families alike. These costs encompass not just the obvious expenses such as hiring a moving truck or company, but also hidden fees like utility connection charges, temporary storage solutions, and the purchase of packing materials such as boxes, bubble wrap, and tape. Unfortunately, for the majority of homeowners, these moving costs are not tax-deductible, adding to the financial strain of the moving process.

These costs are generally classified as personal expenses and are not directly tied to the sale of the property, which means they do not qualify for any tax breaks or deductions under current tax laws. This can be particularly frustrating for new homeowners who may already be facing significant expenditures related to their new residence, including mortgage payments, renovations, and furnishing their new space. However, it is worth noting that there are some exceptions to this general rule. For example, active-duty military members who are required to move due to military orders can benefit from certain deductions that are specifically designed to alleviate the financial burden associated with relocating for service-related reasons.

It is crucial for individuals to be well-informed about the IRS rules regarding which moving expenses can be deducted and which cannot. Understanding these regulations is essential not only for maximizing potential deductions but also for ensuring compliance when filing your taxes. Familiarizing yourself with the specifics of what qualifies as a deductible moving expense can save you from potential issues with the IRS down the line. This knowledge can empower you to make informed decisions regarding your moving expenses and help you navigate the complexities of tax filing more effectively. For instance, while personal moving expenses are typically non-deductible, some business-related moving costs may be eligible for deductions if you are relocating for a job or starting a new business. Therefore, it is advisable to consult with a tax professional or refer to the IRS guidelines to clarify any uncertainties and to ensure that you are taking advantage of any available tax benefits.

Maximizing Deductions on Your Primary Residence

Selling your main home can lead to a variety of tax implications that may significantly affect your financial situation. Understanding these tax effects is crucial for homeowners who wish to maximize their profit from the sale. However, there are several strategies available that can help you reduce your tax liability and potentially increase the deductions you qualify for. One of the most important tips is to maintain meticulous records of any home improvements and upgrades you have made over the years.

This includes not only major renovations, such as kitchen remodels or bathroom updates, but also smaller enhancements like new flooring, landscaping, or energy-efficient windows. Each of these improvements can contribute to the overall value of your property, and having detailed documentation can be invaluable when it comes time to calculate your capital gains.

Another excellent strategy is to take advantage of the IRS rule regarding capital gains. This rule provides certain homeowners the opportunity to exclude a significant portion, or even all, of the profit made from the sale of their primary residence from taxable income. Specifically, if you meet certain criteria, such as having owned and lived in the home for at least two of the last five years, you may be eligible to exclude up to $250,000 of capital gains if you are single, or up to $500,000 if you are married filing jointly.

This can lead to substantial tax savings and is a critical aspect of financial planning for anyone considering selling their home. By familiarizing yourself with these regulations and diligently tracking your home-related expenses, you can ensure that you are well-prepared for the sale and can retain a larger portion of the proceeds from your home sale.

Utilizing the IRS Exclusion for Capital Gains

One big tax break for homeowners selling their main home is the IRS exclusion for capital gains. This exclusion lets sellers keep a lot of their profit from taxes. To get the full exclusion, you need to have owned and lived in the home for at least two of the last five years before selling it.

The exclusion is $250,000 for single filers and $500,000 for married couples who file together. This means a single person can sell their main home and make a profit of up to $250,000 on the sale of a personal home. Couples can make up to $500,000 without having to pay any capital gains tax.

This exclusion can really help lower or even wipe out your capital gains tax. It is important to know the eligibility rules and fully use this benefit when selling your home.

Documenting Home Improvement Expenses

To get the most tax deductions when you sell your home for cash, keep good records of home improvement costs. Having detailed information about all the renovations and improvements during your time as a homeowner, including any home equity projects, can lower your tax liability. This means you should save receipts, invoices, contracts, and any other important documents.

Not every home improvement can lower your taxes, so it's important to know the IRS rules. Usually, improvements that can be deducted are those that increase your home's value, make it last longer, or adapt it to new uses beyond normal repairs and maintenance.

Good record-keeping not only supports your deductions but also helps set a clear cost basis for your property. By showing how much you have spent on your home, you may lower your capital gain and reduce your tax bill.

Special Considerations for Second Homes and Investment Properties

The tax benefits for selling a primary residence are quite large. However, different rules apply when it comes to a second home or an investment property. When you sell a second home or an investment property, you usually face a taxable capital gain. This is different from the capital gains exclusion offered for primary residences.

It’s very important to know this difference. You should talk to a tax expert to understand your tax situation. They can help you understand capital gains tax, depreciation recapture, and the deductions you might have for rental income and expenses. This will help you be ready for the money-related side of selling your property.

Different Rules for Capital Gains Deduction

The capital gains exclusion provides big tax benefits for people selling their primary home. However, selling a second home involves different rules. When you sell a second home, you usually have to pay capital gains tax on the profit you make. Yet, there are some exceptions and strategies to help lower your tax liability.

One choice is to change your second home into your primary residence for a set time before you sell it. This change can let you use the capital gains exclusion. This way, you might protect some of your profit from taxes.

It is important to understand these rules. Talking with a good tax advisor can help you find the best ways to improve your financial situation when selling a second home.

Reporting Rental Income and Expenses

Selling a rental property comes with important tax rules, especially about reporting rental income and expenses. As a landlord, you need to report all the rental income you receive on your tax return. This is usually done on Schedule E.

The good news is that you can also deduct many costs related to owning and managing your rental property. Some of these deductible expenses include mortgage interest, property taxes, insurance premiums, repairs, and depreciation.

By keeping careful records and reporting these numbers correctly, you can follow IRS rules while lowering your taxable income from your rental property.

Navigating State Taxes and Implications on Home Sales

Navigating the world of real estate and taxes can be tricky. You need to understand not just federal rules but also the taxes in your state. Federal capital gains tax often gets a lot of attention, but states have their own rules about capital gains and deductions when selling a home.

Some states have capital gains tax rates that are much different from the federal rate. Others may give more deductions or credits for sellers. It is important to look up the tax laws in your state. Talking to a tax expert who knows local rules is also key. This will help you with planning your taxes and making the most money possible when you sell your home.

State-Specific Capital Gains Tax Rates

When selling a home, understanding the tax implications involves considering state-specific capital gains tax rates in addition to federal regulations. These rates can vary significantly from state to state, influencing your overall tax liability.

Some states have no capital gains tax, providing a considerable advantage for sellers. In contrast, other states may impose high rates or have specific rules regarding capital gains exclusions or deductions.

Consulting the following table or seeking guidance from a tax professional specializing in your state's tax laws is essential for accurate tax planning:

State	Capital Gains Tax Rate
California	Up to 13.3%
New York	Up to 8.82%
Florida	0%
Texas	0%

Potential Deductions and Credits at the State Level

Looking at state tax deductions and credits can be a smart choice for home sellers. States usually offer extra tax breaks, often assessed by local government, to encourage people to own homes or make certain home improvements. This can help lower your overall taxes.

The deductions or credits will differ based on your state's tax laws. They may focus on things like energy-efficient upgrades, making homes accessible, or helping first-time homebuyers.

It's important to check your state's tax rules or talk to a tax advisor who knows the local laws. This can help you find and use any available deductions or credits. Doing this could save you a lot of money.

Conclusion

When you sell a house, it's important to understand the taxes involved. You can lower your tax bill by deducting important costs, including deductible costs like real estate agent commissions, home improvements, and closing costs. Just a note, some costs, like home warranty plans and moving expenses, may not qualify for deductions.

Make sure to keep good records of your expenses and use any IRS rules that can help you. If you have questions about home sale taxes or need help with the deductions, reach out to us. We want to help you get the best tax benefits when selling your home.

FAQ For Expenses You Can Deduct When Selling a House

Can home staging costs be deducted?

Understanding Home Staging Costs and Their Tax Implications

Home staging costs can play a significant role in the successful sale of a property. When preparing a home for sale, many homeowners opt to hire professional staging services or rent furniture to enhance the appeal of their space. These costs, which can include a variety of services and items, are typically considered necessary expenses aimed at making the home more attractive to potential buyers.

Types of Home Staging Costs

There are several components that can contribute to the overall costs of home staging. Firstly, hiring a professional staging service often involves fees for consultation, design, and installation. These professionals are skilled in creating an inviting atmosphere that highlights the property’s best features while minimizing any less desirable aspects. Their expertise can be invaluable in ensuring that the home appeals to a wide range of buyers. In addition to professional services, renting furniture and decor is another common expense associated with staging a home. This can include everything from sofas and chairs to artwork and decorative items that enhance the aesthetic appeal of the space. The cost of renting these items can vary significantly based on the quality and quantity of the items chosen, as well as the duration of the rental period.

Tax Deductibility of Home Staging Costs

One of the key benefits of incurring these home staging expenses is their potential deductibility when it comes to filing taxes after the sale of the property. According to IRS guidelines, costs that are directly related to the sale of a home can often be added to the seller’s real estate tax deductions. This means that homeowners can potentially recoup some of the expenses incurred during the staging process, thereby reducing their overall taxable capital gains from the sale. It is important for homeowners to keep detailed records of all staging costs, including receipts and invoices from professional services and rental agreements for furniture. Proper documentation will be essential when calculating the total amount of deductible expenses, as well as for substantiating these deductions in the event of an audit.

Conclusion

In summary, home staging costs, including the hiring of professional services and the rental of furniture, are generally deductible when selling a home. By understanding the various components of these costs and maintaining thorough documentation, homeowners can take advantage of tax deductions that may significantly offset the financial impact of staging their property. This strategic approach not only enhances the likelihood of a successful sale but also provides potential financial benefits during tax season.

How does selling a house affect my federal taxes?

Selling your home can significantly impact your federal taxes, particularly by triggering a capital gains tax. This tax is imposed on the profit you make from the sale of your property, which is defined as the difference between the selling price and your adjusted basis in the home. Your adjusted basis generally includes the original purchase price of the home, plus any significant improvements you made over the years, minus any depreciation you may have claimed if the home was used for rental purposes.

When you sell your home, the amount of profit you earn plays a crucial role in determining your tax liability. If you realize a substantial profit from the sale, you may be liable for capital gains tax on that amount. The tax rate you pay can vary depending on how long you owned the home. If you owned the property for more than one year, your profit may be subject to long-term capital gains tax rates, which are typically lower than short-term rates applied to properties held for less than a year.

However, many homeowners may qualify for the capital gains exclusion, which can significantly reduce or even eliminate the taxable amount of your profit. To qualify for this exclusion, you generally must meet specific criteria set by the IRS. For instance, you must have owned and used the home as your primary residence for at least two of the five years preceding the sale. If you meet these requirements, you can exclude up to $250,000 of capital gains from your taxable income if you are single, or up to $500,000 if you are married and filing jointly.

It is essential to keep thorough records of your home purchase, any improvements made, and the final sale price to accurately calculate your capital gains and determine your tax obligations. Additionally, if you are selling your home due to unforeseen circumstances, such as a job relocation or a divorce, there may be exceptions that allow for partial exclusions, even if you don't meet the standard two-out-of-five-year rule.

In summary, selling your home can lead to a significant capital gains tax liability based on the profit you earn, but understanding the potential for capital gains exclusion can provide valuable tax relief. It is advisable to consult with a tax professional or financial advisor to navigate the complexities of your specific situation and ensure compliance with IRS regulations while maximizing your tax benefits.

What documentation do I need to claim selling expenses on my tax return?

To get back selling costs on your tax return, it is essential to maintain thorough and organized records. This process begins with collecting and preserving all relevant documentation associated with your property sale. Specifically, you should gather statements for closing costs, which typically encompass a variety of fees such as title insurance, attorney fees, and any other charges that were incurred during the finalization of the sale. These closing costs can often be substantial, and having a detailed statement will help you accurately report these amounts.

Additionally, it is important to retain invoices from your real estate agent. These invoices should outline the commission fees charged for their services, which are often a significant portion of the selling costs. Ensure that these documents clearly indicate the services provided and the corresponding fees, as this information will be critical when calculating your deductions.

Moreover, you should keep all receipts for any costs that are deductible. This may include expenses for repairs made to the property prior to the sale, staging costs, or even advertising expenses if you marketed the property yourself. Each of these expenditures can contribute to reducing your taxable gain from the sale, thereby enhancing your potential tax refund.

Having this proof will not only support your claims to the Internal Revenue Service (IRS) but will also provide you with a comprehensive understanding of your financial situation regarding the sale. In the event of an audit, being able to present organized and detailed records will facilitate the process and help substantiate your deductions. Therefore, it is advisable to create a dedicated folder—either physical or digital—where you can store all these documents in one place. This proactive approach will streamline your tax preparation process and ensure that you maximize your eligible deductions related to selling costs.

What Closing Costs Are Tax Deductible When Selling a Home?

When you sell a home, some closing costs can be deducted from your taxes, including the property tax deduction. This includes things like loan origination points and real estate taxes paid by the seller. However, costs like moving expenses cannot be deducted. It is a good idea to talk to a tax professional to find out which closing costs are tax-deductible based on current tax laws.