Have you recently sold your property on the Chevy Chase real estate market? If so, then you’ll definitely want to take a few moments to read my Chevy Chase blog today!

It’s important that every home seller understand what capital gains are and how they impact you once you’ve sold your property. Luckily, as your local housing market expert, I’m here to help!

So What Are Capital Gains and How Do They Work?

Whenever a home owner successfully sells their home, they will likely find that their tax returns may be impacted.

First, let’s take a look at exclusions. Here’s how these work: If you sell your primary residence, you may have the option to exclude up to $250,000 of gain from your federal tax return. This value may be as high as $500,000 if you’re a married couple.

In order to claim this exclusion, you’ll need to show the IRS that you owned the home and that you used it as your primary residence for at least two of the last five years prior to selling it.

Next, let’s consider specifications. In this instance, you must not have excluded gain on another home sold during the last two years in order to qualify for an exclusion.

You also should know that there are special rules that apply for those members of the armed and uniformed forces as well as foreign services.

If in the event that you do not meet ownership and use requirements, you may still use a reduced maximum exclusion amount for certain instances, such as you sold your home because of health of a change in employment.

How About the Rules Around Reporting Gains?

In the event that you’re able to exclude all the gain from the sale of your home, you do not need to report it on your federal tax return.

However, if you can’t exclude all of the gain or you choose not to, you will need to use Schedule D of Form 1050, Capital Gains or Losses, to report the total gain and claim the exclusion for which you qualify.

What About For Those Who Own More Than One Home?

In that case, you’ll only be able to exclude the gain from the sale of your main residence.

For any other home you sell, you must pay tax on the gain.

Your Dedicated Chevy Chase REALTOR®

Please contact me, Melinda Estridge, for more valuable home selling tips and advice! I would be happy to help you at every stage of the Chevy Chase home selling process!

Until next time,

Melinda