Could you face a tax bill on your home sale?
The rapid rise in home prices could lead to some tax surprises…….
Understanding potential tax consequences
If you do have to pay capital gains tax, how much you owe will depend on how long you owned the house, your filing status, and your income.
Selling a house you’ve owned for 1 year or less generates the steepest potential tax rate. In that case you don’t qualify for the exclusion and gains are considered short term, meaning they’ll be taxed at ordinary income rates, which can run as high as 37%. If you’ve owned the home for more than 1 year but less than 2, then you still don’t qualify for the exclusion, but you’ll pay lower, long-term capital gains rates on gains.
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