Guide to Taxes When Selling Your Home in Greenwich

Are you thinking about selling your home in Greenwich but wondering how taxes might impact your sale? Navigating the tax implications of selling a home can be complex, especially with specific rules that vary by location. Understanding what to expect can help you prepare and maximize your profits. This comprehensive guide from the Metalios Team, led by Joy Metalios, breaks down the essential tax considerations when selling your home in Greenwich, helping you make informed decisions as you plan your sale.

Key Tax Considerations When Selling Your Home in Greenwich

1. Capital Gains Tax: Will You Owe It?

One of the most significant tax implications of selling a home is the potential for capital gains tax. This tax applies to the profit you make from selling your property. Here’s how it works:

• Primary Residence Exclusion (Section 121 Exclusion): If the home you’re selling is your primary residence, you may qualify for an exclusion on capital gains. The IRS allows single filers to exclude up to $250,000 of profit, while married couples filing jointly can exclude up to $500,000.

• Qualification Criteria: To qualify, you must have lived in the home for at least two out of the past five years before the sale.

• Tax Rate: Any gains above the exclusion threshold are taxed based on your income bracket, with rates ranging from 0% to 20%.

Tip: For detailed advice tailored to your situation, consult a tax professional or CPA.

2. State and Local Taxes in Greenwich

Connecticut imposes state-level taxes that sellers should be aware of, including:

• State Capital Gains Tax: Connecticut may levy a state capital gains tax in addition to federal taxes. While rates vary, it’s essential to account for this potential expense when calculating your net proceeds.

• Real Estate Conveyance Tax: In Greenwich, sellers must pay a real estate conveyance tax. This tax is calculated based on the sale price and includes both state and local components:

• State Tax: Ranges from 0.75% to 1.25% depending on the property’s value. The first 800,000 is taxed at .75% and anything above 800,000 is taxed at 1.25%

• Municipal Tax: Greenwich charges an additional 0.25%.

Example: If you sell your home for $800,000, you would pay $8,000 in conveyance taxes.

3. Impact of Home Improvements and Adjusted Cost Basis

Your adjusted cost basis directly affects how much you might owe in taxes. This figure includes the original purchase price of your home plus the cost of capital improvements made over the years, such as:

• Kitchen or bathroom renovations

• New roofing or windows

• Major landscaping projects

These improvements can reduce your taxable gain by increasing your cost basis. Make sure to keep detailed records and receipts of all qualifying expenses.

4. 1031 Exchange: Deferring Taxes

If the property you are selling is a rental property and you are planning to reinvest the proceeds from your sale into another property, a 1031 exchange might be an option. This strategy allows you to defer capital gains taxes by using all the proceeds to purchase a similar investment property. Note, however, that this option is generally available only for investment properties, not primary residences.

5. Other Deductible Expenses

Some expenses related to selling your home can be deducted to reduce your taxable gain. These include:

• Real Estate Agent Commissions: Fees paid to your Greenwich Realtor, such as the Metalios Team, are deductible.

• Closing Costs and Purchase Costs: Certain closing costs, like legal fees or title insurance, may also qualify as deductions.

• Staging, Repairs, and Painting: Costs for staging or necessary repairs and painting to sell your home might be deductible.

How to Prepare for Tax Implications When Selling Your Home

Organize Your Records

• Keep documents related to your home purchase, improvement expenses, and previous tax filings.

• Work with your Greenwich real estate agent, such as the Metalios Team, to calculate your estimated proceeds and potential tax obligations.

Consult the Experts

While real estate agents like Joy Metalios and her team can guide you through the selling process, always consult a tax professional for specific advice. They can provide clarity on deductions, exclusions, and strategies to minimize your tax burden.

Why Choose the Metalios Team?

Selling a home in Greenwich involves more than just putting your property on the market. From understanding taxes to navigating the Greenwich real estate market, having an experienced team by your side can make all the difference. The Metalios Team, led by Joy Metalios, specializes in helping sellers like you get the most out of your sale. With deep knowledge of the local market and a commitment to client success, we’re here to support you every step of the way.

Ready to Sell Your Home in Greenwich?

Selling a home is a significant decision, and understanding the tax implications is an essential part of the process. Whether you’re looking for expert guidance or ready to list your property, the Metalios Team is here to help. Contact us today to schedule a consultation and take the first step toward a successful sale.