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Ten Tax Tips for Individuals Selling Their Home

by Leslie Edwards

IRS Summertime Tax Tip 2011-15, August 8, 2011

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their 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 as your main home 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, 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.

  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.
For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
To buy or sell real estate, call me. Leslie Edwards 770.460.9448 leslie@leslieedwards.com www.SouthMetroAtlantaMLS.com RE/MAX

Health Care Smealth Care

by Leslie Edwards

Subject:  2011 W-2 Tax Forms--Surprise, surprise!

 Should you want to verify this, go to http://www.thomas.gov/, enter "HR 3590" 
in the search box and look for "CRS Summaries."  This is what you'll find. 
  
Title IX Revenue Provisions—Subtitle A:  Revenue Offset 
"(Sec. 9002) Requires employers to include in the W-2 form of each employee 
the aggregate cost of applicable employer-sponsored group health coverage 
that is excludable from the employee's gross income (excluding the value of 
contributions to flexible spending arrangements)." 

 Starting in 2011—next year—the W-2 tax form sent by your employer will be 
increased to show the value of whatever health insurance you are provided.   
It doesn't matter if you're retired. Your gross income WILL go up by the amount 
of insurance your employer paid for. So you’ll be required to pay taxes on a larger 
sum of money that you actually received.

Take the tax form you just finished for 2009 and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it a redefinition of your taxable income. 
  
Also, go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that 
could affect you. 
    
Additionally, the current 2.9% Medicare tax goes up to 3.8% and in addition to applying to payroll taxes, now also applies to interest, dividends, incentives, & all other income types.
Remember, the Bush tax cuts expire at the end of the year...that places everyone in a higher tax bracket.
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Yet another very good reason to vote in the primary and the November elections.  Vote out the tax and spend politicians, whether they are Democrat or Rebublican.  The only change in the direction this country is taking will be the result of our votes.  See you at the polls. leslie edwards

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If you hear of anyone who wants to buy or sell in any of these areas, please mention me and then call me so I can contact them. I appreciate your referrals!