If you want to sell your house fast, there are a number of aspects of the sale you need to consider. One of which is the tax aspect of the sale and how that sale will affect your current tax profile. If you are used to self assessment of tax returns, maybe it’s time to consider getting some professional help.
The Basics
Here are some of the things you will want to consult your tax advisor or attorney. The first is if you are single or married and if you and your spouse are filling a joint return. This will weigh heavily on how you both are affected with the sale of the home or the property. For instance, the sale of your main home could see up to a quarter of a million dollars in exclusions for singles and up to half a million for those filing jointly. This is a tremendous difference and for these reasons understanding how your status and your filing format affect you is important from the start. It is also important that you plan for this in advance. It is not wise to plan for the tax implications only at the brink of the transaction.
In some cases, when you sell your house fast, there may have been various enticements you may have included to get the buyer to yield. For instance you could have purchased new appliances or you could have left recently purchased appliances for them to sweeten the deal. All these need to be looked at closely to determine the IRS treatment of the asset and the transaction.
Main Home
Another issue you must consider is whether the home you are selling is an investment property or the main home you are living in. Investment properties are treated differently than a person’s primary residence. Better tax breaks are reserved for those selling their primary home than if it is classified as the liquidation of an investment asset. One of the distinguishing factors between a main residence and investment property is that the owners must have been living in it for a certain period of time. If you sell your house fast, after your purchase, convincing the authorities that it is your primary home would be rather difficult.
The accepted definition of being a person’s main home is that he, she or they should live in it and should have done so for the immediately preceding two years, continuously. Which means to say that at any point during the time, the owner should have been living there without moving in and out while renting the property out to other tenants?
You will need a real estate agent to evaluate your circumstance if your situation is complex, where you bought the home but were soon after shipped overseas for a job. There are numerous cases where the intent for a home is for it to be the primary residence but circumstances change it. In these scenarios, it’s best to be conservative in your treatment and get an experienced agent to advice.
