What Taxes Do I Pay On The Sale Of My Home?

This is what I like to call a Search Engine Smack Down  where I start to type a real estate question into Google, let Google auto-finish the question however it wants and then answer that question. Here I’m going to start by typing “When selling my house…” One of the first ways that Google finishes this question is by saying “what taxes do I pay?” THAT
will be the Search Engine Smack Down for today!
google-screenshot-taxes-i-pay
Most questions people have about selling their home deal with money. Their home is often their largest investment and they hope to make as much profit as they can to use for their next home or stage of life. The question “When selling my house, what taxes do I pay?” is a great question because everyone has to pay some sort of taxes on their home.
The first kind of taxes you pay when selling your home is your property taxes. Most property tax bills are not due until January of the following year. If homeowners sell their home, let’s say on June 30th. The title company will withhold the prorated taxes for the year, in this case 6 months worth, from the cash the seller earns from the sale and give it to the buyer who will be responsible for the full tax bill when it comes due. Simply, you will be responsible for the property taxes for the part of the year that you owned the home.
The second kind of taxes you might have to pay when you sell your home is capitol gains taxes or CGT. CGT is the tax on the positive difference between what you paid for your home and what you are now selling it for. Since 1997 when the Taxpayer Relief Act became law, a homeowner will pay NO tax on the first $250,000 of capitol gains if he or she is single and the $500,000 if they are married. So in most cases, you will not owe any capitol gains taxes on the sale of your home. The biggest caveat to this is that the home you are selling must be your primary residence.
This is general tax information and I suggest you consult your accountant if you have specific questions. If you have a specific question that you would like answered, click here to visit the “Ask a Question”. You can see other REAL Answers by going here. Anyways, I hope this Search Engine Smack Down has been helpful for you. This is Real Estate and that’s the Real Answer!
If you need help buying or selling a home, connect with me here and I’d love to help however I can!
Kyle Pfaffe, REALTOR    kpfaffe@cityscapepg.com   512.636.9707
Cityscape Property Group
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