Possible tax deductions can arise in relation to a wide range of different activities. This includes activities related to real estate. One real-estate-related action a person may be able to claim tax deductions in connection to is the selling of their home.
Examples of costs that a person who has sold their home may be able to claim deductions for in connection to the sale and the home include:
- Property taxes.
- Moving expenses (for moves related to relocation for work).
- Mortgage points.
- Home improvement costs related to getting the home into better selling condition.
- Selling costs (like advertising costs, commissions paid to a real estate agent, escrow fees, inspection fees, legal fees and title insurance costs).
The rules regarding when these sorts of things can be deducted can be very detailed and complex. So, many different things can impact what exactly a given home seller would be able to deduct.
This complexity is among the things that could make it easy for a home seller to miss deductions they could qualify for. This is among the reasons why, when selling a home, a person may want to carefully look at their situation to see if there are any deductions they would qualify for, so as not to miss possible tax savings.
Of course, it is also very important for taxpayers to ensure that, in their efforts to get all the deductions and tax savings they qualify for, they don’t accidently claim an invalid deduction. The Internal Revenue Service takes misuse of deductions very seriously. So, being accused of misusing a deduction (such as claiming a home-sale-related deduction for an expense that doesn’t qualify), can put a taxpayer in a very serious legal situation.
Skilled and experienced tax law attorneys understand the gravity of misuse of deduction allegations and the tactics and approches the IRS often uses in cases involving such allegations. Such attorneys can assist taxpayers facing such accusations with developing a strategy for dealing with the matter.
Source: Forbes, “5 Tax Deductions Sellers Won't Want To Miss,” Jan. 29, 2016