What Are the Tax Implications of Selling a Home in Dane County?

Selling a home in Dane County, Wisconsin, is an exciting milestone. However, it’s essential to understand the potential tax implications of your sale to avoid surprises come tax season. From capital gains taxes to exemptions, this blog breaks down the tax rules you need to know when selling your home in Dane County.

1. Understanding Capital Gains Tax
Capital gains tax is a federal tax on the profit from selling your home. Here’s how it works:

• Calculation: The capital gain is the difference between your home’s selling price and your adjusted basis (original purchase price plus costs of improvements).
• Rates: Long-term capital gains rates range from 0% to 20% depending on your income level.

2. Capital Gains Tax Exemptions for Homeowners
The good news is that many Dane County homeowners qualify for a significant exemption:

• Primary Residence Exclusion:
  • Single filers can exclude up to $250,000 of capital gains.
  • Married couples filing jointly can exclude up to $500,000.
• Eligibility Requirements:
  • You must have owned the home and used it as your primary residence for at least 2 of the last 5 years.
  • This exclusion can only be claimed once every two years.

3. Reporting Requirements
Even if you qualify for an exemption, it’s crucial to report the sale to the IRS under certain circumstances:

• If the sale proceeds exceed the exclusion limit.
• If you received a Form 1099-S from the title company.

Your tax professional can help ensure compliance.

4. Other Potential Taxes to Consider
In addition to federal taxes, consider these local and state factors:

• Wisconsin Income Tax:
  • Wisconsin taxes capital gains at the state level, but the rate is generally lower than federal taxes.
• Property Tax Adjustments:
  • If you sell mid-year, you may owe or be credited for a portion of the property taxes, depending on your closing date.
• Special Assessments in Dane County:
  • Review your closing statement for any special assessments tied to your property.

5. Tax Deductions Related to Selling Your Home
Certain expenses incurred during the sale can reduce your taxable gain, including:

• Real Estate Commissions
• Home Improvements made to increase the sale value
• Closing Costs related to the sale

Keep detailed records of these expenses for your tax filing.

6. Tips to Minimize Your Tax Burden

• Plan Ahead: If you’re nearing the exemption limit, consider delaying or structuring the sale strategically.
• Consult a Professional: Tax rules are complex, and working with a tax advisor can help you maximize your savings.
• Track Home Improvements: Maintain detailed records of major repairs and renovations to increase your adjusted basis.

Partner with a Local Expert
Navigating the tax implications of selling a home can be overwhelming, but you don’t have to go it alone. As a local real estate expert and Air Force veteran, I’m here to help you make informed decisions and connect you with trusted tax professionals.

Conclusion
Understanding the tax implications of selling your home in Dane County is essential to making the most of your investment. By planning ahead and consulting experts, you can minimize taxes and maximize your financial gains.

Contact Information:
John Reuter
Integrity Homes
📞 608-669-4226
📧 john@integrityhomeswi.com
Brokered by Real Broker, LLC