It takes a lot of work to get your home ready to be sold, and as you work through the process you should be aware of your tax strategy as well. In fact, if you pay attention to the amount of capital gains taxes that you pay, you could save yourself some serious cash in the sale of your home.
What is the capital gains tax, and how does that apply to your tax strategy? A capital gain is simply the money that you make as an item or property increases in value. In many instances capital gains apply to real estate because there is such an influx in the appreciation or depreciation of a home. If you have lived in the home as your primary residence for two of the past five years, the money you make on the home could be taxed at as much as 20%, depending on your income. It can put a huge damper in your tax strategy when you have to pay that much of your profit to Uncle Sam.
Now, you may wonder why you should consider capital gains throughout the time that you own your home, but it is an essential part of any good tax strategy. The reason behind this is that the losses that you take on the home can be tax deductible. Losses can include repairs or improvements made on the home. That means if you paid to increase your home value by putting in a fence or finishing a basement, you can potentially deduct the money put into those improvements from the money that you gain in the sale of your home. By not keeping records of these improvements, you are setting up a tax strategy to fail.
Your tax strategy should always be to pay the least amount of taxes possible. To truly get the most out of the sale of your house, you need to keep accurate records of all the repairs made to improve the home so you can show that all of that increase in value came at a cost.

Karla Dennis

As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.

Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.

As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.