5 Tax Deductions When Selling

You may be wondering if there are tax deductions when selling a home. And the unequivocal answer is YES!


Although the 2018 tax code (Tax Cuts and Jobs Act) changed some rules, homeowners tax deductions can still amount to sizable savings.


See the list below for a rundown of all the deductions and exemptions at a sellers’ disposal.



1. Selling costs

These deductions are allowed as long as they are directly tied to the sale of the home, and you lived in the home for at least two out of the five years prior to the sale. But, keep in mind that the home must be a principal residence and not an investment property.


In addition, you can deduct any costs associated with selling the home such legal fees, escrow fees, advertising costs, real estate agent commissions and home staging fees. You can subtract these costs from the sales price of your home, which in turn positively affects your capital gains tax.

2. Home improvements and repairs

If you renovated a few rooms to make your home more marketable with the intention of getting more bang for your buck, you can also deduct those upgrades. This includes painting the house or repairing the roof or water heater.


Please note that if you needed to make home improvements in order to sell your home, you can deduct those expenses as selling costs as long as they were made within 90 days of the closing.

3. Property taxes

The property tax deduction is capped at $10,000. So, if you paid the taxes on your property up to the point when you sold your home, you can deduct the amount you paid in property taxes this year up to $10,000.

4. Mortgage interest

As with property taxes, you can deduct the interest on your mortgage for the portion of the year you owned your home.

Just remember that under the 2018 tax code, homeowners can deduct the interest on up to only $750,000 of mortgage debt. Although, homeowners who got their mortgage before Dec. 15, 2017, can continue deducting up to the original amount of up to $1 million.


Note that the mortgage interest and property taxes are itemized deductions. This means that for it to work in your favor, all of your itemized deductions need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled to:


  • $12,550 for individuals

  • $18,800 for heads of household, and

  • $25,100 for married couples filing jointly

  • $12,550 for married couples filing separately

5. Capital gains tax for sellers

The capital gains tax rule is an exclusion instead of a deduction. Let me explain.

Capital gains are your profits from selling your home—whatever cash is left after paying off your expenses, plus any outstanding mortgage debt. These profits are also taxed as income.

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