Southwest Missouri Real Estate Blog

Well, the frost is not quite on the pumpkin yet, but it’s getting there. For the most part, we’re having classic fall weather, with nights in the forties and days in the sixties. We had one night close to freezing, but that’s it so far.

Beautiful blue skies and sun top it all off, although we are supposed to have rain tomorrow. We need the rain, though, so I can hardly complain.

Fall leaves seem prettier here than in most years, so that’s a plus, too. I’m not sure what combination of our very dry summer and the current weather caused it, but we seem to have a lot more red and yellow leaves instead of the usual brown and gold.

Yep, fall in Southwest Missouri. Can you tell that I’m getting myself psyched up for winter? Love those four seasons! Except when snow and ice are involved…

It’s surprising how few people know that the gain on the sale of their home is sheltered from taxes.

Here in this rural area, I do taxes in the winter as well as real estate all year long. Many times I have people, often times older folks who didn’t pay much for their house, come in petrified about paying taxes on the gain on the sale.

So here’s a simple way to remember the basics. Ask yourself:
1. Was this place my main home for at least two out of the last five years? It doesn’t have to be two years in a row, just two years total.
2. Is this the first main home I’ve sold in the last two years?

If you can say yes to both of these questions, you’re pretty much good to go. You get to exclude $250,000 of gain if you’re single, $500,000 of gain if you’re married filing joint. As a matter of fact, you don’t even have to put anything on your tax return about the sale.

Of course, if you have a loss, you get zip. Nada. Nothing, except true sympathy from me and none at all from the IRS.

Now of course, this being involved with the IRS, there are many and various nuances about divorce, deployment, property used for business, etc. Here in Southwest Missouri it’s also important to consider whether the home was on a working farm, since the farm part may have a taxable gain while the gain on the home is excluded. Always tell your tax preparer your entire circumstances so they can do their best for you.

But if you’re kind of a “regular” person, living in a “regular” house, paying tax on the gain on the sale of your home is one tax worry you can cross off your list.

Tax disclaimer here: I’m not giving full tax advice on this blog. Instead, I try to highlight some of the basic tax issues that come up in real estate. Always check my information with your own tax preparer to get the most current, accurate tax advice that is best for your personal circumstances.