Selling your home in Milwaukee can be tricky, especially when you’re trying to make sense of the financial side. The good news? Most of the costs that one incurs when selling their house are tax-deductible.
In other words, if you sell your house, you could save thousands of dollars once tax season rolls around.
Whether you’re going to sell the traditional way or looking for a quick cash sale, knowing your costs can make a big difference.
Here’s a brief summary of the costs you can deduct when selling your Milwaukee house.
1. Understanding The Cost Of Acquisition
Your cost of acquisition includes more than just the purchase price. It also includes:
- Closing costs
- Real estate taxes you paid for the seller
- Lender acquisition fees (usually 1–4% of the sale price)
Assuming you bought a house for $300,000, and you spent $4,000 on acquisition costs, your true cost is $304,000. Using this number will reduce what you pay in capital gains tax, so it’s important to keep records of all these expenses.
2. Incidental Costs You Can Deduct
When you bought your home, it’s likely you paid for other services. Many of these can be added to your cost basis to reduce your tax burden:
- Attorney fees
- Title search and insurance
- Property surveys
- Transfer and recording taxes
- Home inspections and appraisals
Adding these expenses to the overall cost means you may pay less in taxes when selling.
3. Home Improvement (Enhancement) Spending
Not all improvements are tax-deductible, but major improvements that increase the value of your property can reduce your taxable gain. Those are:
- Kitchen and bathroom remodels
- New HVAC or roofing
- Adding a deck, room, or garage
- Major landscaping
- Energy-efficient windows
Just remember: regular repairs like fixing leaks or repainting don’t count. Keep all receipts and records for proof.
4. Selling Expenses You Can Deduct
Some of the costs you pay to sell your house can also be deducted from the sale price, including:
- Real estate agent commissions
- Legal fees
- Advertising or listing fees
- Home staging and photography fees
- Escrow and notary fees
- Repair costs
- Transfer taxes and title insurance
Every one of these can help with reducing the capital gains tax you might owe, so don’t overlook them.
5. How To Track And Maximize Deductions
Here’s how you can stay organized:
- Check your HUD-1 Or Closing Statement: This will list many deductible expenses.
- Use IRS Publication 523: It offers clear guidance on what qualifies.
- Keep Improvement Receipts: Every dollar counts.
- Work With A Tax Pro: A knowledgeable tax advisor can ensure you don’t miss anything.
Final Thoughts: Get The Most Value When You Sell
Selling your home can be a costly process, but if you understand which expenses are deductible, you can reduce your tax bill and keep more of your money.
And if you’re thinking, “I need to sell my house fast,” you’re not alone. Whether you’re in a tough spot financially or looking to skip the stress associated with making repairs and hosting showings, cash home buyers in Milwaukee like Sell House Fast Milwaukee can help.
We buy houses in Milwaukee in any condition. Sell to us if you want to avoid realtor commissions, closing costs, and long waiting periods. We’ll help you sell fast and with confidence.