selling your home, home sale taxes, Virginia real estate, capital gains, Arlington VA, sell my house, RE/MAX Allegiance

How Much Tax Do I Pay When I Sell My House in Virginia?

Many homeowners owe no federal tax on the profit from selling the home they live in. If you owned and lived in it for at least 2 of the last 5 years, the IRS lets you leave out up to $250,000 of gain, or $500,000 on a joint return.

Do I owe tax when I sell my home in Virginia?

Many homeowners owe no federal tax on the profit from selling the home they live in. If you owned and lived in it for at least 2 of the last 5 years, the IRS lets you leave out up to $250,000 of gain, or $500,000 on a joint return.

This is general information, not tax advice. Your own numbers decide your answer, so talk with a CPA or tax pro before you list.

The Mike Webb Team (Mike and Claudia Webb, RE/MAX Allegiance) helps homeowners in Arlington, Northern Virginia, Maryland, and Washington, DC get their homes ready to sell and sold.

What is the home sale rule?

The IRS lets you leave out up to $250,000 of gain from the sale of your main home. If you file a joint return with your spouse, the limit is $500,000. Gain means what you sell for, minus what the home cost you, minus certain costs of buying, improving, and selling. Source: IRS Topic No. 701.

Who qualifies?

You usually need to meet two tests in the 5 years before the sale date:

• You owned the home for at least 24 months (2 years).

• You lived in it as your main home for at least 24 months.

The two periods do not have to be the same two years. If you file a joint return, both spouses must meet the use test.

What if I sold another home recently?

Generally, you cannot use the rule if you left out gain on another home you sold in the two years before this sale. There are exceptions, and the IRS explains them in Publication 523. Ask your tax pro.

What if my gain is bigger than the limit?

Gain above the limit can be taxable. That is why long-time owners keep records: what the home cost, and receipts for big improvements. A tax pro can tell you which costs count.

Will I get a tax form?

If you receive a Form 1099-S, the IRS says to report the sale even when the gain is excluded. Your settlement agent can tell you what will be filed.

What about Virginia?

State income tax rules and the charges that show up at closing are separate topics. Ask your CPA about the state side. Your settlement statement lists the costs at closing line by line, and we walk you through it before you sign.

FAQ

Do I owe tax if I lost money on the sale?

Ask a tax pro. A loss on a main home is usually treated differently from a gain.

Does the rule cover a rental or second home?

It is written for your main home. Other properties follow other rules, so ask before you sell.

When should I talk to a CPA?

Before you list. It is easier to plan than to fix.

Call or text The Mike Webb Team at 703-350-3884 or claudiawebb.com.

The Mike Webb Team, RE/MAX Allegiance. Arlington, Virginia. Equal Housing Opportunity.