Selling a home in Hawthorn Woods, IL is an exciting milestone, but it’s important to understand the tax implications that come with it. If you’re planning to sell your home, knowing how capital gains taxes and potential exemptions apply can help you maximize your financial return and avoid unexpected tax liabilities.
Do You Have to Pay Capital Gains Tax When Selling Your Home?
When you sell a home for more than you originally paid, the profit—also known as capital gains—is typically subject to capital gains tax. However, many homeowners qualify for exclusions under IRS rules. If your home was your primary residence for at least two of the last five years, you may be eligible for the capital gains tax exemption:
- Single homeowners can exclude up to $250,000 in profit.
- Married couples filing jointly can exclude up to $500,000 in profit.
This means that if your gains fall within these limits, you won’t owe any taxes on the sale. However, if your profit exceeds the exemption, the excess amount may be subject to capital gains tax.
How Can You Reduce Taxable Profit on Your Home Sale?
To lower your taxable gains, certain selling costs and improvements can be deducted from the sale price, including:
✔️ Real estate agent commissions
✔️ Legal and closing costs
✔️ Home improvements made before selling
✔️ Title insurance
✔️ Advertising expenses
By factoring in these deductions, your total taxable profit may be reduced, potentially minimizing or eliminating capital gains tax liability.
What About Investment Properties or Second Homes?
If you’re selling an investment property or a vacation home in Hawthorn Woods, you won’t qualify for the primary residence exemption. Instead, capital gains taxes typically apply. However, you may be able to defer taxes by using a 1031 exchange, which allows you to reinvest the proceeds into another qualifying property without paying taxes immediately.
Selling a Home in Hawthorn Woods? Work with a Local Expert!
Navigating home sales and tax laws can be complex, which is why working with an experienced real estate professional is essential. At Helen Oliveri Real Estate, we specialize in selling homes in Hawthorn Woods, IL, and surrounding communities. We can help you understand tax implications, connect you with trusted tax professionals, and develop a strategic plan to maximize your home’s value.
💡 Thinking about selling your home? Let’s make sure you get the best return possible! Contact Helen Oliveri Real Estate today for expert guidance on selling your home in Hawthorn Woods.
📞 Call or text 847-967-0022 to start planning your home sale with confidence!
