What will you owe the tax man? - Novi real estate

What are the Tax Implications of selling your Novi home

You are just about at the closing table and you are already thinking... "What will I owe to Uncle Sam for taxes when I sell my home?  If you are selling your primary residence you will be glad to know these tax rules.

The rules are that if you sell your primary residence, you typically can exclude a gain of as much as $500,000 if you're married and filing a joint return with your spouse (or $250,000 if you're single or married filing separately) and meet certain conditions. 
To be eligible for the full exclusion, you typically must have owned the home -- and lived in it as your principal residence -- for at least two of the five years prior to the sale. These exclusion amounts aren't indexed for inflation. (When calculating your cost basis, don't forget to include additions and other "improvements," such as a new roof, deck or heating system. However, this subject -- and other adjustments you may need to make -- can be tricky. For details, see IRS Publication 523.)

Remember this is not a one time exclusion.  You can do this every two years if you meet the rules and guidelines.

If the home is a second home or an investment property different tax rules apply.  I always say take your closing papers to your CPA or tax man at the end of the year.  They are the best people to ask whether you owe nothing on your primary residence.

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