Costa Mesa Real Estate Tax Tips

OK, OK, I know it is way too early to start thinking about tax time, unless you postponed your taxes for 6 months with an extension like a few friends i know. You might think it is early to start thinking about your 2011 taxes, but moves that you might be making right now with real estate sales or purchases could have consequences on your next tax return. This is a question one of my sellers asked me about taxes on their Providence Park home, so if it is on their mind, it must be a good question – let’s look at the items that could be of biggest benefit to you and how Costa Mesa real estate tax tips might help you.

OK, these are straight out of the IRS website, so they should be allowable deductions:), although it is always good to check with your accountant before you make moves with buying or selling your real estate:

 

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their Costa Mesa home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home:

1. In general, you are eligible to exclude the gain from income if you have owned and used your home in Costa Mesa as your main home or primary residence for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain of your real estate, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home. Aw, c’mon! At least if you are doing a short sale now you don’t have the junior liens chasing you since the passage of SB458 in Costa Mesa and California.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

That’s the short list! I hope these Costa Mesa Real Estate Tax Tips helped you. If you are considering selling your Costa Mesa home, feel free to drop me a line at my email or call (714) 743-9882.