Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.
12-05-2017 01:39 PM
I am in the process of selling my home in NJ. I live in NC. What do I need to be aware of as far as filing taxes? How much should I save to pay taxes? Is it to my advantage to sell at the end of the year or wait until the new year?
12-05-2017 05:26 PM
Welcome to the H&R Block community.
You might not have to pay taxes on the federal level at all if you meet certain criteria. If you lived in the home for at least two out of the last five years, and if you owned the home for at least two out of the last five years, and if you haven't taken an exemption from taxable gain on the sale of a home in the past two years, then your first $250,000 worth of gain is exempt from being taxed ($500,000 if MFJ).
On your state returns you may or may not be able to claim an exemption. Most states follow the federal rules or are similar, however you may want to check your state department of revenue website for further details for your specific state.
Because the home is in New Jersey, you will have non-resident NJ income, so you will have to file a NJ tax return for the year in which the home is sold. You will also have to report the capital gain on your NC tax return because all income from all sources derived must be reported to your state of residence. However, you can take a credit on your North Carolina tax return for tax paid to NJ though. The only way this would be different is if there was a reciprocity agreement between the two states, but there isn't one here.
Note that on the federal level, if the tax bill passes the full Congress and becomes law, the requirements for the exclusion of gain will change to five years rather than two.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)
12-07-2017 02:02 PM
You're quite welcome.
If you lived in your home for less than five years then you'll want to close on the sale by December 31st of this year. The reason is that if the tax bill becomes law and you closed on the sale in 2018 then you'll lose out on the $250,000 exclusion of gain if you lived in the house for less than five years. But through the end of 2017 the requirement for the exclusion remains two years.
Also, if you're paying mortgage interest for you or for the buyer at closing then you'll want to close by December 31st because that deduction is going to limited with the passage of the tax bill. On that note, you might want to consider paying your January mortgage payment in December of this year for the house that you're currently living in so that you can be sure and get the full mortgage deduction for that payment as well.
Other than that everything is the same no matter which year you sell it in. The sale gets reported on Form 8949/Schedule D. You'll just realize the income and pay the tax (if any) in 2019 instead of the upcoming year if you sell the house in 2018.