If you own a home, you might want to start thinking about the IRS. According to Julian Block's Home Seller's Guide to Tax Savings, there are ways to lighten your tax load whether you're living in your home or selling it.

Here are some top home seller tax tips:

Get a wedding gift from the IRS.

Are you a newlywed, or are you getting married? If you and your new spouse (or spouse to be) each own homes, and you sell before or after your trip down the aisle, on your joint return, each of you can exclude as much as $250,000 of gain, provided each could exclude up to $250,000 if you filed separately. Unfortunately, one spouse can't use any part of the other's unused exclusion, so as to exclude gain of more than $250,000 per person. (Individuals may exclude up to $250,000 in gain on their home sale, and married couples may exclude up to $500,000 when they file jointly.)

Bundle ordinary repairs into a bigger job.

If you're debating whether to save up for a major renovation but still have a few repairs around the house that need attention, think about bundling them together (if your repairs can wait). Block says your home's adjusted basis (which consists of the property's purchase price plus the cost of purchase, sale, structural improvements, legal fees paid to defend or to perfect title, zoning costs, and the cost of selling the property) includes only the cost of permanent improvements (including replacing a roof or building an addition) so it might pay to postpone repair projects until they can be done in connection with an extensive remodeling or restoration project. Adding the smaller jobs into the bigger job may allow you to include some items that would otherwise be considered repairs, such as the cost of painting rooms.

Don't forget to deduct points paid when you financed or refinanced your mortgage.

When refinancing an existing mortgage, or if you pay off the loan early, take a deduction in the payoff year for all remaining points you were charged when you obtained the loan. For example, if you refinanced your mortgage and paid points in the amount of $2,000 and have deducted $400 over the years, you can deduct the balance of $1,600 in the tax return for the year in which you refinance the property. If you refinance, check on whether you need to increase or decrease the amount taken out for federal income taxes from your paychecks or to increase estimated payments. If you will need to pay more to the IRS, you should increase your withholding or quarterly estimated payments. And if you will owe the IRS less, you can decrease those payments to the IRS. To revise your withholding, file a new Form W-4 with your employer.

Prepay your credit card debt, not your mortgage.

If you find you've got a little extra cash on hand at the end of the month, you might be thinking about throwing a few dollars toward paying off your mortgage. And why not? It would be great to own your home debt-free. But if you also have credit card debt, you should instead take those bucks and pay down your highest interest rate debt. For someone in the 30 percent tax bracket (federal and state), an investment would have to yield a whopping 26 percent before taxes to match the benefit available from just paying off a credit card costing 18 percent. And with mortgage interest rates near historic lows (this week, a 30-year fixed rate mortgage can be had for about 4.5 percent), paying off a credit card makes much better financial sense. And the tax tip: Mortgage and home equity interest is tax-deductible if you itemize on your federal income tax return.

There are other tax deductions and perks available for homeowners.

In his book, which is available at Amazon, Block takes homeowners through foreclosure and short sale tax issues. And for more personalized information, consult with your tax preparer, accountant or enrolled agent.

 

 

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(c) 2011 ILYCE R. GLINK. DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.